CAPE TOWN, Feb. 20 (Xinhua) -- The South African government will not pay the debt owed by cash-strapped electricity utility Eskom which is blamed for a worsening power crisis, Finance Minister Tito Mboweni said on Wednesday.
"I want to make it clear: the national government is not taking on Eskom's debt. Eskom took on the debt. It must ultimately repay it," the minister said while delivering his 2019 budget speech in Parliament.
Eskom, which provides about 95 percent of the electricity consumed in South Africa, is facing debts amounting to 420 billion rand (about 30 billion U.S. dollars). The state-run parastatal has urgently appealed to the government to help it repay the debt so as to prevent it from bankruptcy.
"Pouring money directly into Eskom in its current form is like pouring water into a sieve," Mboweni said.
For the past two weeks, the utility has implemented the most severe load shedding for years, plunging large parts of the country into darkness and disrupting economic activities.
It's estimated that the South African economy suffers more than one billion rand for each load shedding.
Eskom has been accused of using load shedding to blackmail the government, but the utility has denied the allegation, saying the recent load shedding was caused by the breakdown of several power stations.
Although the government will not pay Eskom's debt, it is setting aside 23 billion rand a year to financially support the utility during its reconfiguration, Mboweni said.
The fiscal support is conditional on an independent Chief Reorganization Officer being jointly appointed by the ministers of finance and public enterprises with the explicit mandate of delivering on the recommendations of the Presidential Task Team, Mboweni said.
"We will make announcements in this regard in the coming weeks," he said.
According to Mboweni, Minister of Public Enterprises Pravin Gordhan and the team he has built at his ministry will continue to exercise close and ongoing monitoring of Eskom.
Mboweni said Eskom will be reconfigured under the "clear and executable plan" announced by President Cyril Ramaphosa in his State of the Nation Address last week.
At the core of this plan is the subdivision of Eskom into three independent components, a move that will set the electricity market on a new trajectory and allow for more competition, transparency and a focused funding model, said Mboweni.
