News24
12 Jul 2020, 20:40 GMT+10
The Public Investment Corporation (PIC), Africa's biggest fund manager, must ensure that state-owned power utility Eskom will operate profitably before its R92 billion debt pile is converted to equity, said Deputy Finance Minister David Masondo.
The plan proposed by workers' unions that the PIC convert its debt into equity to help ease the power utility's debt burden "has the potential to work", Masondo said. While Eskom has been able to pay interest on the debt, the power utility would need to generate sufficient revenue and profits to pay dividends, Masondo said.
"The PIC must ensure that the expected dividend earnings will be reasonably higher than the current interest earned on their loans," Masondo told the City Press newspaper. "Eskom must meet certain conditions if converting PIC debt to equity is to be successful and sustainable."
Eskom, which supplies almost all of South Africa's power, has about R450 billion in debt and its revenue doesn't match service costs. A proposal that the fund manager, which manages over R2 trillion, take a stake in the utility, was submitted to Treasury this year, the PIC chair Reuel Khoza said in June.
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