NEWS
22/01/2018 07:12 SAST | Updated 22/01/2018 07:12 SAST

Treasury, Eskom To Look To Banks To Avoid Loan Defaults

Eskom needs to raise R20 billion to remain a going concern.

MUJAHID SAFODIEN via Getty Images
Finance Minister Malusi Gigaba.

Eskom and Treasury will approach local banks in an effort to restore lending to avoid the suspension of Eskom bonds from the JSE, and to avoid defaulting on a World Bank loan, Business Day reported on Monday.

In order to convince auditors that it is still a going concern, Eskom reportedly needs to raise R20-billion over the next few weeks. This will allow it to publish its interim financial statements and get access to foreign debt capital markets.

Should the World Bank issue a letter of default this week, it will trigger a 14-day recall on its $3.75-billion loan, Business Day reported.

Finance Minister Malusi Gigaba reportedly said that the main problem for banks was governance issues at Eskom.

"The Treasury director-general, Dondo Mogajane, is preparing as of Monday to raise money; we think lenders will be open to us again."

At the weekend, Deputy President Cyril Ramaphosa ordered sweeping changes at Eskom, including the appointment of a new board and the removal of compromised executives.

On Sunday night, Public Enterprises Minister Lynne Brown said the new Eskom board had to be fast-tracked owing to the parastatal's precarious financial position.

According to News24, she said: "Fast-tracking the appointment of Eskom's new board was [necessitated] by the company's precarious liquidity position and the previous board's perceived prevarication in dealing with executives facing serious allegations of impropriety."

In an interview with eNCA on Sunday, Gigaba said Eskom's embattled executives, Matshela Koko and suspended chief financial officer Anoj Singh, must resign in the interest of the country.

Eskom reportedly told Business Day that it was in a position to pay salaries and release its interim financial statements by the end of January, but that if it was unable to raise R14 billion in February and R6 billion in March, this could change.