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DA: Statement by Pieter van Dalen, Democratic Alliance shadow minister of public enterprises, questioning where Eskom’s cash injection is going to be funded (11/11/2010)

11th November 2010

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The Democratic Alliance (DA) calls on the Zuma administration to make public the exact costing of how the government's planned R20 billion cash injection into Eskom is to be funded. This is a considerable amount of money that is apparently being provided to Eskom on top of the doubling of the guarantee framework agreed to last month.

A Cabinet announcement this morning indicated that R20 billion is to be injected into Eskom, over and above the doubling of Eskom's guarantee framework from R176 billion to R350 billion, announced last month.

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The Zuma administration itself seems confused about how it will finance this new injection. Initially, cabinet spokesperson Themba Maseko claimed that certain state assets were to be sold off, before retracting that statement due to the fact that such a plan had, apparently, not in fact been approved by the relevant ministerial cluster.

Why would the government have to retract such a major economic announcement? Such a deeply significant, and almost instantatenous, policy change suggests that the divisions within President Zuma's cabinet run deep. It appears certain quarters of the cabinet or tripartite alliance immediately objected to the plan that was initially announced. The right hand does not seem to know what the left hand is doing. Less than three months ago the government could not find R4 billion to fund public servants' pay rise request. This also seems to contradict the previous Minister Barbara Hogan's commitment not to give new money to state enterprises, raising possible questions as to why she was removed from Cabinet.

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Naturally, the government could not withdraw such an announcement and so now, instead, the cash injection will apparently be funded 'as part of the budgeting process.'

This is very vague indeed. One does not just find R20 billion in the budget. Where exactly is this money going to come from and why is the doubling of the framework guarantee not considered sufficient financial assistance to Eskom?

Any budgetary allocation, especially one of this significance, should be explained to the public, who have a right to know how the nation's finances are being managed, especially when the money is destined for a beleaguered parastatal that has demonstrated a lack of budgetary and overall strategic planning in the past.

The provision of a stable power supply is one of the most important foundations for economic and social progress in South Africa. Eskom is already in dire financial straits and has received a certain amount of assistance from the government. Any further assistance must be carefully considered, costed and presented to the public in a clear manner justifying the expenditure to ensure complete transparency and consultation. This is a public company, after all, benefitting from public funds. The government should do the right thing and publicise the details of the new funding immediately.

 

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