According to a letter from Finance Minister Tito Mboweni to Speaker Baleka Mbete and a report by the minister to Parliament, R5 billion was released to the troubled power utility after an expected installment on a R2.5 US$loan from the China Development Bank was delayed.  

The delay meant that Eskom was unable to meet obligations that became due at the end of March, Mboweni wrote, plunging the company into liquidity difficulties.

He therefore resorted to invoking section 16 of the Public Finance Management Act to prevent Eskom defaulting, which would have triggered a call on government guarantees.

Mboweni explained that the first tranche of financial relief for Eskom of R69 billion over three years announced in his national budget in February, had not been available because Parliament rose ahead of the May elections before a special appropriations bill could be processed by the legislature.

This meant that these funds would likely only be paid over to the company between August and October this year.

Mboweni said the problem arose because Eskom was not able to draw down R7 billion from the China Development Bank loan because of "central bank exchange control requirements." The money was expected on March 25 and it is not clear from his missive whether it has since been released.

The minister did, however, reveal that government had, in order to avert a crisis, asked the Corporation for Public Deposits to release R4.6 billion to tide Eskom over but the request was declined.

It then turned to Absa for R3 billion in bridging finance, against a government guarantee. The R5 billion released from the National Revenue Fund after section 16 of the PMFA was invoked, was used to refund this emergency loan.

Mboweni added that Eskom would need further assistance by the end of April.

Eskom referred all queries on the matter to the department of public enterprises, which was not immediately available to respond to questions.

It is understood, however, that the money availed to Eskom to cover its obligations earlier this month, and further such payments Mboweni foresees necessary, will be redeemed against the R23 billion he allocated the company in additional funding for the year.

The report to Parliament notes that the finance ministry has freed up R17,652 billion for Eskom for the remainder of the current financial year, and that the R5 billion paid over earlier this month formed part of that sum.

Mboweni stated that the rest of the R23 billion would only be given to Eskom in the next financial year.

"The remaining balance of the R23 billion will have to be subjected to the normal appropriations process when Parliament is constituted after the election."

Eskom has debt of R419 billion of which R281 is guaranteed by government.

ANA