South Africa offers bailout for state-owned power utility Eskom
On Tuesday, July 23, the South African minister of finance presented a bill to parliament requesting a bailout of more than $4 billion for state-owned power utility Eskom. Eskom supplies about 95 percent of South Africa’s power , but has been unable to generate sufficient revenue to meet its operational and capital demands. As a result, the utility currently holds more than $30 billion in debt , an amount that continues to increase as it undertakes repairs on power plants . Author
The bailout should allow Eskom to remain solvent in the face of its current debt. However, on Thursday, Moody’s Investors Service warned that the bailout could trigger a credit rating downgrade because it would be a drain on South Africa’s financial resources. A further negative, the credit rating agency added, is that the bailout lacks an accompanying plan to improve Eskom’s ability to generate revenue and become financially stable.
In other South African electricity news, a ransomware attack on electricity provider City Power left some Johannesburg residents without power on Thursday. The attack prevented customers from purchasing power and made it more difficult for City Power to respond to outages. On Friday, Johannesburg officials said that most of the company’s IT systems had been restored , but acknowledged that some problems remained. Kenya re-nationalizes the troubled Kenya Airways
On Tuesday, Kenya’s parliament voted to re-nationalize Kenya Airways , which was first privatized by the government 23 years ago. The airline has not been profitable since 2014 and faces mounting debt and losses. A 2017 restructuring converted $2 billion in losses to equity. Currently, the government owns a 48.9 percent stake in the carrier , a consortium of local banks own 38 percent, and Air France-KLM owns 7 percent, with minority shareholders accounting for the rest. All shareholders will be bought out over the next two years with Air France-KLM being offered the option to continue as a technical partner. Related
Following the parliamentary vote, the transport ministry will draw up a roadmap for nationalization over the next three months. Nationalization will exempt the airline from taxes on a range of inputs, and proponents hope it will improve competitiveness. As per the approved plan, the airline will become part of a holding company that will also control three other entities—the Jomo Kenyatta International Airport, an aviation academy, and the Kenya […]
