Eskom is one step closer to a massive bail-out

The National Assembly has approved two Bills that pave the way for a support package.

Eskom is now a step closer to a multi-billion rand cash injection that’s aimed at beefing up its bottom line. Picture: Reinart Toerien/EWN.

CAPE TOWN - Eskom is now one step closer to a multi-billion rand cash injection that's aimed at beefing up its bottom line.

The National Assembly has approved two Bills that pave the way for a support package announced by Cabinet last year.

They must now be approved by the national council of provinces before President Jacob Zuma can sign them into law.

Finance Minister Nhlanhla Nene gave details about the bailout in his February budget speech.

Nene has told Members of Parliament (MPs) government has no choice but to make sure the ailing parastatal is put on a proper financial footing.

"If we inject the equity and convert the subordinated loan Eskom will be in a better position to go out in the market to raise funds," said Nene.

The one Bill provides for a R23 billion cash injection for Eskom with the money to be raised from the sale of what Nene calls 'non-strategic state assets'.

The second Bill provides for R60 billion subordinated loan to be converted into equity.

Opposition parties, including the Democratic Alliance, Economic Freedom Fighters and the Freedom Front Plus opposed the Bill.

Nene resisted demands that he detail which assets will be sold, saying all will be revealed before the end of this month.

WARNINGS LOAD SHEDDING COULD CUT GDP

Meanwhile, 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 for the second time earlier this year.

It said it expected the economy to grow by 2,1 percent this year.

Eskom said it needed to raise tariffs in order to recover some of its operating costs.

Consumers were already hit with a 12,69 percent electricity tariff hike in April.