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S. Africa Taking on Partial Eskom Debt

FILE: Locals walk past electricity pylons during frequent power outages from South African utility Eskom, caused by its aging coal-fired plants, in Orlando, Soweto, South Africa, September 28, 2022

South Africa's government will take on a portion of struggling state utility Eskom's debt in a staggered manner to avoid a spike in the country's debt-to-GDP ratio, Finance Minister Enoch Godongwana said on Thursday.

"Whatever tranche (of Eskom debt that is taken on) must keep us at a stabilized debt to GDP (level)," he said in a Reuters interview after a meeting with the country's delegation to the World Economic Forum that kicks off in Davos next week.

The National Treasury said at October's mid-term budget that it could take on between one-third and two-thirds of Eskom's 400 billion rand ($23.59 billion) debt to try to make the company financially viable.

Eskom has been mired in financial crisis for years and is dependent on government bailouts.

It is currently implementing some of the worst power cuts on record, a major source of public frustration with the governing African National Congress (ANC) and a brake on economic growth in Africa's most industrialized nation.

Eskom has also been prominently featured in the "State Capture" investigation involving alleged looting of its assets by people connected to former President Jacob Zuma. Eskom says that it lacks the funds to maintain and replace its creaky power generation machinery and the grid that sends juice out to the nation.

South Africa to Take on Eskom's Partial Debt
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