Print Edition - 2019-02-22 | MONEY
SAfrica announces $1.6 billion bailout for state power utility to keep lights on
Feb 22, 2019-
South Africa’s Finance Minister Tito Mboweni announced on Wednesday a $1.6 billion-a-year bailout for the country’s electricity utility in a bid to stave off further downgrades to Pretoria’s credit rating as he unveiled a new budget.Credit ratings agencies have warned that state power utility Eskom’s $30 billion debt crisis could spark credit rating downgrades which would embarrass President Cyril Ramaphosa as he prepares for nationwide elections on May 8.
“We must prune and pluck away at the rot until there is growth,” said Mboweni, brandishing a South African bitter aloe plant in the parliament chamber in Cape Town to illustrate his point.
“It will not be easy, there will be no quick fixes, but we are ready.”
Maintenance issues at Eskom’s power plants plunged swathes of the country into darkness this month as the utility implemented rolling blackouts and struggled to restore supplies.
The crisis has quickly become a leading election battleground issue, with the main opposition Democratic Alliance (DA) calling for Eskom’s privatisation.
“Instead of taking bold and decisive action it was a lipstick budget... it looked pretty on the outside but we need a plan. We should be selling (Eskom),” said DA leader Mmusi Maimane after the speech.
Mboweni also hiked taxes on cigarettes and beer by seven percent and increased duty on a litre of fuel by roughly $0.02 per litre in order to plug an expected 15.4 billion rand ($1.08 billion) shortfall in tax revenue for the past year.
“I feel as South Africans we need our alcohol and our cigarettes to function. It doesn’t matter how much it costs, we are still going to buy,” said a luxury handbag saleswoman who declined to be named.
“The more difficult life gets for us as South Africans, the more we drink and smoke.”
Money was also announced for infrastructure projects, including provincial schools and agriculture projects that will appeal to the ruling African National Congress’ (ANC) rural electoral base. Mboweni delivered his maiden budget wearing a blue and white checked shirt, red tie and blue jacket, often pausing to quote the Bible.
Published: 22-02-2019 11:18