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Eskom’s R10bn loan ‘not a simple cash bailout’

Nhlanhla Nene says government will be getting involved in the months to come to bring Eskom back on its feet.

FILE: Minister of Finance Nhlanhla Nene. Picture: Sapa.

DAVOS - Finance Minister Nhlanhla Nene says the more than R10 billion rand to be given to Eskom isn't a simple cash bailout.

This comes after reports that the money will be injected into the cash-strapped utility by June this year.

Nene is one of more than 50 South African delegates attending the World Economic Forum being held in Davos.

The minister said both government and the private sector will be getting involved in the months to come to bring Eskom back on its feet.

Exact details of how government will be assisting the power utility will be revealed during Nene's first budget speech next month.

The utility has been battling to keep up with demands due to limited generating capacity, ageing infrastructure and several technical issues at its power stations.

The power utility said earlier this week if it stops importing electricity from neighbouring Namibia and Mozambique it will not be able to continue maintenance or avoid load shedding.

The utility currently imports 200 megawatts from Namibia and 1,500 megawatts from Mozambique.

Eskom said it's paying a standard tariff for this extra electricity which is meant to fill the gap created by old systems going offline.

WARNINGS LOAD SHEDDING COULD CUT GDP

Local economists have warned power cuts could cut Gross Domestic Product growth by one percentage point.

The International Monetary Fund cut its predictions for economic growth for South Africa again on Monday night.

It now says it expects the economy to grow by 2.1 percent this year.

Eskom also says it needs to raise tariffs in order to recover some of its operating costs.

Consumers will be hit with a 12.69 percent electricity tariff hike in April.

At the same time, Eskom has also warned of rolling blackouts to relieve pressure on the national electricity grid.

The power utility says load shedding could continue until at least April.

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