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Finance Minister: No extra funds for Eskom  Comments
October 27, 2009


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 nearly 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 SAA'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 some 85 percent 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 SA 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 like 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

Showing page 1 of 2 comment pages, 20 total comments
14 Weeks ago Sick and tired wrote :
I must agree with the gentleman that said that the taxpayer must cough up for all and sundry to make the governments mistakes go away, and yet we get threatened for not paying our taxes. WELL EXCUSE ME DO YOU BLAME US, WE'RE SICK OF CHUCKING MONEY INTO A BIG HOLE AND SEEING IT GO UP IN BONUSSES AND SALARIES , to a undeserving bunch of beaurocrats!!!!
15 Weeks ago DrTruth wrote :
You already own SAA 100% ... and now you convert their debt into equity??? That 's my tax paying money feeding the previous SAA CEO's debt hole??? So what more have you bought me??? Do I get a discount on tickets?? Please people....... What value am I getting for my tax??? And yet SAA spends how much of our money on advertising, executive bonus's and trumped up incentive schemes for travel agents???? And Eskom??? Please don't get me started on those idiots... they would not be able to survive in a normal company. They want to invest now and have us foot the bill....while they still have so many inefficiencies in their own processes and systems.... and also have a charitable nature to constantly write off debts for non paying municipalities?????? and who pays the whole time.... ME !!!!
15 Weeks ago Anonymous wrote :
I'd rather see the R47bn go to Eskom and prevent further price tariff increases, then acquire a few military planes. Do we even have a qualified pilot to fly one?
15 Weeks ago Mfanafuthi Khumalo wrote :
Its a Good start for Gordhan, its about time someone cut the greedy ESKOM FAT CATS to size, ESKOM was bailed out by Trevor, we didnt see what happened to that money, the FAT CATS were busy awarding themselves HUGE bonuses, everytime they asked for money it goes into their pockets, its a Parastatul organisation, the JZ government must protect the people who voted it to pwer from these GREEDY FAT CATS, everytime they get money its NEVER enough for them, we're tired of this!!
15 Weeks ago buffalobill wrote :
There's incompetence all around us and we as the taxpayers have to pay for it! It's going to continue for so long as the ANC believes it has a divine right to "rule". And can someone please explain why Government is going to pay Sasol's price fixing fine? Sasol must pay out of its own pocket - preferably out of management bonuses.
15 Weeks ago Ed wrote :
Show me a single ministry or department which has not gone backwards during the past 15 years ... and I will take you to the end of the rainbow :-) It is shocking.
15 Weeks ago Anonymous wrote :
Sorry Irate, but we just can't afford the lube. You'll just have to grin and bare it.
15 Weeks ago Observer wrote :
Good! however they'd better not have any further severe increases. We have had enough of that and simply cant facilitate it any longer! Eventually we will fall behind with payments they will cut us off, and then if we dont switch back on where will they get their precious funding then? Fridges and Freezers can be converted to Gass and have Gass heated water too. What about our computers and so on and so on, who knows...back to the good old pen and paper I guess. .....Goodbye electronic age! We will see the collapse of the country as we know it!! Bravo Eskom! Your short sightedness has paid off.
15 Weeks ago Anonymous wrote :
Taxpayers to foot the bill for SASOL"s fine? A disgrace! We are now being double billed for the greediness by unlowal and treasonous CEO's of SASOL who should foot the bill or be sent to jail. I object in the strongest terms.
15 Weeks ago Anonymous wrote :
Okay, let me get this right: cough up on military planes, cough up on Sasol price fixing, cough up on previous arms deal, cough up on Eskom management, cough up on spending huge amounts on new cars, indaba to discuss cough up on service delivery, cough up on SAA. Can someone please point out if something is going right? The most amazing thing is the bigger the cough up the bigger the golden handshake to go away which we, the tax payer pays for. I dream of getting a job like that, in may job I have to be responsible.
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