25 April 2019

South Africa: 72 Hours in Late March - When Eskom Pushed South Africa to the Edge of Financial Collapse

Photo: Eskom
Eskom's national control centre (file photo).
analysis

Beneath the electioneering bubble of sound bites and choreographed photo opportunities lies an economic governance nightmare. For 72 hours at the end of March 2019, Eskom took South Africa to the brink. In this season of securing power by citizens' votes, it seems no one really cared to notice -- and those in charge made sure it stayed that way.

For 72 hours from 26 March 2019, South Africa stood at the edge of economic collapse as Eskom ran out of money and could not meet its liabilities and obligations. A scramble to raise money ensued as government cannot allow an economic collapse by Eskom default.

A R3-billion commercial loan on the back of government guarantees was obtained on 29 March. It was repaid with the R5-billion disbursed from the R17.652-billion authorised by Finance Minister Tito Mboweni in terms of the Section 16 emergency provisions of the Public Finance Management Act (PFMA) on 2 April.

If Eskom had defaulted, it would have triggered the immediate demand for repayment of R281-billion the power utility leveraged against government guarantees as part of its overall R419-billion debt. This kind of money is simply not available in the national coffers, as emerged in February's...

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