Gordhan: No extra funds for Eskom

Treasury’s adjusted budget estimates, tabled in Parliament on Tuesday, make no provision at all for additional funding for utility Eskom, which claims it has a shortfall of about R40-billion on its infrastructure expansion programme.

Briefing the media ahead of delivering his mid-term budget speech in the National Assembly, Finance Minister Pravin Gordhan conceded that this meant the shortfall would have to be recovered from the staggering price increases demanded by the state electricity provider.

“There is no new money,” he told reporters.

Gordhan said, however, that Treasury was deeply concerned about the impact of price hikes on households and businesses, and would continue to look for alternative ways to find more funding for Eskom and reduce pressure on consumers.

The adjusted budget sees public enterprises getting an increase in funding to pay national carrier South African Airways’s debts, as well as the penalty incurred by arms manufacturer Denel in its controversial Airbus contract.

The department converted a guaranteed loan of R1,56-billion to SAA into equity to the reduce the struggling national carrier’s debt, which means that it spent about 85% more in the first half of this year compared to last year.

SAA was given the loan in February when former finance minister Trevor Manuel tabled his last budget.

Gordhan allocated an additional R191,866-million to state-owned Denel Saab Aerostructures for a penalty relating to a contract under which the South African military would acquire eight A400M Airbus heavy-lifter freight planes.

It stems from Denel’s failure to meet performance targets as part of the deal to acquire.

A massive joint European manufacturing project to launch the A400M—the world’s biggest military aircraft—has been dogged by problems, with major partners such as Britain threatening to pull out because of delays and soaring costs.

Armscor chief executive Sipho Thomo this month told Parliament that buying eight of the aircraft would cost South Africa R47-billion, compared to the R17-billion estimated in 2005 when the deal was inked.

Gordhan said the provision to cover the penalty was no indication of any firm government decision on going ahead with the deal.

A decision would be taken by Cabinet in the next few weeks, he added.

Gordhan was obliged to allocate an additional R250-million to the Department of Public Works, to cover a fine handed down to Sasol by the Competition Commission for fixing fertiliser prices.

The new finance minister said there was no policy decision to privatise troubled state-owned enterprises, a suggestion at which Public Enterprises Minister Barbara Hogan hinted earlier this year, earning her a stinging rebuke.

“The p-word has not been used,” he said.—Sapa