South Africa to swallow part of Eskom's debt to keep it afloat

South Africa's treasury vowed Wednesday to take over a portion of Eskom's multi-billion-dollar debt to ensure the embattled energy utility's viability and curb the energy crisis that has put breaks on growth.

In a mini budget statement, Finance Minister Enoch Godongwana said government has decided to give Eskom 225 billion rand ($12.4 billion) towards its debt for the period 2019 to 2026.

"The programme will allow Eskom to focus on plant performance and capital investment," the minister said before parliament, adding the debt takeover will ensure the company no longer relies on government bailouts. 

Eskom, which he labelled the biggest risk to the economy, is bucking under a 400-billion-rand debt.

For more than a decade and a half, it has battled to adequately power up the continent's most industrialised economy.

"The debt takeover, once finalised, together with other reforms will ensure that Eskom is financially sustainable," he said.

The government has for more than a decade poured billions of rands into Eskom, "with limited improvements in the reliability of the electricity supply or the financial health of the company," he said.

Sweeping power outages, caused by failures at ageing and poorly maintained infrastructure at the state-owned company -- which provides almost all of South Africa's electricity -- have severely hampered economic growth.

Projected economic growth for this year is 1.9 percent, falling dismally from 4.9 percent in 2021, according to budget documents.

In addition to recurring power cuts, which have brought an immense economic cost, the recovery has also been hampered by a series of shocks.

These include massive damage caused by riots, which broke out in July 2021 following former president Jacob Zuma's jailing and left more than 350 dead.

Unprecedented floods that swept through the country's third largest city of Durban, killing hundreds, also put a damper on growth.