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By IOL Reporter 
2h ago
Cape Town – The Democratic Alliance will oppose what it calls a “desperate move” by Eskom that “will continue to prevent anyone from having a say in how money is spent.”
The National Treasury approached a holder of Eskom’s debt, the Public Investment Corporation (PIC), to convert around R95 billion of Eskom’s debt held by the PIC into shares, said Ghaleb Cachalia, spokesman for the companies. DA public, in a statement Saturday.
This was despite Eskom being “in a utility death spiral as well as a debt spiral,” according to Olga Constantatos, head of credit at Futuregrowth Asset Management.
” The government has spent more money than it received for more than a decade and instead of turning to the International Monetary Fund (IMF) for financing or seeking sensible privatization options that include strategic private-sector equity partners, it seems bent on go ahead with a scheme that potentially opens our pension fund, larger than Germany’s, to risk, ” Cachalia said.
Additional plans involve converting government-guaranteed debt into sovereign bonds. Most of Eskom’s debt (R350 billion) is already guaranteed by the government and the swap could put Eskom in technical default.
The rating agency Standard & Poor’s reportedly said it would lower Eskom’s rating further if it carried out a debt restructuring, which could amount to a default.
“The Democratic Alliance will oppose this desperate move that will continue to prevent anyone from having an opinion on how the money is spent, as a rapprochement with the IMF would imply.
” The reality is that state-owned companies have failed and must be sold, allowing the government to reduce its wage bill and foster an environment conducive to investment and job creation.
” The DA will hire global and local experts in the field of debt management and electricity utilities to address this issue and expose the insanity and dangers of the government’s flawed approach, aimed at continuous command and control that enables the continuation of the waste that took us to this unenviable position in the first place.
“The question is, will the government take responsibility up front for an increase in debt service costs, caused by a further downgrade of Eskom in the event that this crazy plan comes to fruition?”
MESS
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