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Eskom was allocated a massive R254 billion in debt relief over the next three years in the Budget on Wednesday.
The allocation is aimed at relieving the extreme pressure on Eskom’s balance sheet and allowing it to pay down its debt and interest obligations over the medium-term expenditure framework (MTEF) period.
This will enable Eskom to restructure and undertake the investment and maintenance needed to support the security of electricity supply.
Finance Minister Enoch Godongwana acknowledged in his Budget speech that domestic load shedding “has become more persistent and prolonged, impacting on service delivery and threatening the survival of many businesses”.
"Record levels of load shedding were experienced in 2022 – 207 days compared to 75 days in 2021."
"In response, we are acting decisively to bring additional capacity onto the grid. We are also working to transform the electricity sector to achieve energy security in the long term," he said.
The 2023 Budget Review said the scale of Eskom debt relief will require a step change in public debt, which will result in government debt stabilising at 73.6% of GDP in 2025/26 – later and at a higher level than forecast in the 2022 Medium Term Budget Policy Statement, and decline thereafter for the rest of the decade.
Government’s gross loan debt is expected to increase as a result of the Eskom debt-relief arrangement from R4.73 trillion in 2022/23 to R5.84 trillion in 2025/26.
National Treasury acting director-general Ismail Momoniat stressed that the debt relief arrangement is subject to strict conditions.
Godongwana also announced a number of tax proposals in his Budget that are linked to Eskom’s dire generation capacity problems, including:
Tax relief totalling R13 billion in 2023/24 to support the clean energy transition, increase the electricity supply and limit the impact of consistently high fuel prices.
R4 billion in relief for individuals who install solar panels and R5 billion to companies through an expansion of the renewable energy tax incentive.
An extension to the diesel fuel levy refund to manufacturers of foodstuffs for a period of two years from 1 April 2023 until 31 March 2025 to limit the impact of the energy crisis on food prices.
