Eskom May Need $16.5 Billion Over Decade, South African Minister Says

(Bloomberg) -- South Africa’s state-owned power utility may need as much as 230 billion rand ($16.5 billion) of financial assistance over the next decade, Finance Minister Tito Mboweni said.

Eskom Holdings SOC Ltd. needs immediate help and it can’t await restructuring of its business, Mboweni told lawmakers in Cape Town Thursday.

“It is 150 billion rand amortized and that makes it 230 billion rand, or 23 billion rand a year,” National Treasury Director-General Dondo Mogajane said.

On Wednesday, Mboweni announced a 69 billion-rand cash injection over the next three years to help the loss-making electricity producer service its debt and free up money for operations. That’s the biggest bailout in the nation’s history, though it falls short of Eskom’s request for the government to take 100 billion rand of its debt onto its own balance sheet.

Eskom is saddled with 419 billion rand of debt and isn’t selling enough power to cover its interest payments and operating costs, a legacy of years of mismanagement and cost overruns on new plants. The government warned lawmakers last week that the utility “will cease to exist at current trajectory by April 2019.”

The government has had to show its long-term support for the utility, and this help will equate to a minimum of 150 billion rand, Treasury Acting Deputy Director-General Ian Stuart said at the same briefing. “We had to signal our support for Eskom immediately by penciling in the numbers,” Stuart said.

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