South Africa Pledges $5 Billion Eskom Bailout as Budget Creaks

South Africa will bail out state utility Eskom with 69 billion rand ($4.9 billion) over three years, the centrepiece of a budget that exposed the limited room President Cyril Ramaphosa has to fix the economy ahead of an election in May, Reuters reported. Ramaphosa, who is fighting rifts within his own party before the parliamentary election, has made reforming Eskom one of his top priorities as its 420 billion rand debt pile poses a direct threat to Africa’s most developed economy. Analysts said the financial support would give the ailing power firm several years to implement a restructuring plan which will see it split into separate entities for generation, transmission and distribution. But it still leaves Eskom, which last week subjected South Africa to the worst series of power cuts in several years, facing an uncertain future with unsustainable debts, crippling costs and stagnant sales. “The money for Eskom is insufficient given the length of time over which the Eskom reorganisation will occur and the practical and political pitfalls that are ahead,” said Peter Attard Montalto, head of capital markets research at Intellidex. Read more