Eskom Debt Swap Proposal Gets Cold Shoulder From Ramaphosa
(Bloomberg) -- South African President Cyril Ramaphosa signaled he doesn’t back a proposal from the struggling state-owned power utility for the government to assume a large portion of its debt.
There are a number of options being considered to solve Eskom Holdings SOC Ltd.’s large debt burden, he said in an interview Thursday with Johannesburg-based Talk Radio 702. Eskom has told bond investors it wants the government to take on about 100 billion rand ($7 billion) of its debt.
“The debt swap that Eskom has come up with is just going to descend us into further deeper debt as a country,” Ramaphosa said. “So we have said we need to look at a number of other options.”
Ramaphosa will announce a task team to consider solutions for Eskom on Friday, he said. The team will look at Eskom’s current challenges, after the company was forced to implement rolling blackouts, as well as its business and funding models.
Ramaphosa’s comments come as Eskom considers the sale of smaller assets to improve its liquidity, people familiar with the matter have said. The utility is in advanced talks to sell its home-loans business, with local billionaire Patrice Motsepe’s African Rainbow Capital Investments Ltd. in line to take some or all of the operation, the people said.
The president also said:
- He’ll announce a special presidential council on state-owned enterprises Friday.
- The government will help the South African Broadcasting Corp. address its own funding squeeze.
- Constraints to growth, including providing policy certainty and making it easier to secure visas to visit the country, will be addressed. Investment in new infrastructure will be a key driver of growth.
- Corruption in some state companies had reached a “horrifying” level and the issue will be addressed. Those responsible will be jailed once due process has run its course.
- No decision has been taken on an ideal size of the cabinet.
- The ruling African National Congress is addressing its internal divisions, renewing itself and will win a bigger share of the vote than it did in 2014.
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