South Africa has cut its debt relief package for Eskom by R20 billion, transitioning to a loan model. The government’s support now includes R50 billion in loans instead of assuming R70 billion in debt. Eskom anticipates profitability by 2025, although the utility has struggled with consistent power cuts affecting economic growth.

On Wednesday, South Africa announced a reduction in its debt relief package for Eskom by an additional R20 billion, opting to provide some support through loans rather than debt assumption. This decision follows improvements in Eskom’s financial status since the initial debt relief announcement. As part of the revised budget, the National Treasury will extend R50 billion in loans to Eskom instead of assuming R70 billion of its debts.

Previously, the government reduced its support for Eskom by R4 billion after the utility failed to dispose of its Eskom Finance Company within the specified deadline. Eskom has indicated its expectation for profitability by 2025, marking its first profit in eight years. Overall, the government plans to offer Eskom loans totaling R230 billion over five years, about R24 billion less than initially projected.

Eskom’s ongoing struggles highlight the challenges faced by South Africa in reforming the utility, which has relied on government bailouts while imposing rolling power cuts that have negatively impacted economic growth for over a decade. The impending adjustments and financial strategies reflect a critical step toward stabilizing Eskom’s operations and future viability.

The South African government has decided to reduce the debt relief package for Eskom by R20 billion, transitioning to a loan-based support model rather than outright debt assumption. This move comes as Eskom’s financial outlook improves, with expectations for profitability by 2025. However, it underscores ongoing challenges in reforming Eskom, which has historically depended on bailouts and is facing long-term operational struggles.

Original Source: techcentral.co.za