CAPE TOWN, July 31 (Xinhua/GNA) — South Africa’s National Council of Provinces (NCOP), or Upper House of Parliament, has passed the 2019 Appropriation Bill designed to bail out embattled state-owned enterprises (SOEs).
The NCOP passed the bill on Tuesday without any amendments and it will now be sent to President Cyril Ramaphosa for assent, parliamentary spokesperson Moloto Mothapo said.
This is done in line with Section 213 of the Constitution and Section 26 of the Public Finance Management Act (PFMA) which require Parliament to approve any withdrawal of money from the National Revenue Fund for allocation and expenditure by state organs, said Mothapo.
The bill, which has been agreed to by both Houses of Parliament, authorizes the allocation of money from the National Revenue Fund (NRF) to various state institutions to enable its expenditure, Mothapo said.
The National Assembly, or Lower House of Parliament, passed the bill at its plenary sitting on July 23.
The bill was tabled by Minister of Finance Tito Mboweni in Parliament in February.
A number of South Africa’s SOEs, notably electricity utility Eskom, have been in financial trouble, posing a threat to the country’s economic development.
With the bill passed, Eskom will get additional financial support so as to avoid a systemic collapse. The bill requests approval of additional 26 billion rand (about 1.83 billion U.S. dollars) in 2019/20 financial year and 33 billion rand (about 2.3 billion dollars) in the 2020/21 financial year for the state-run parastatal.
Earlier the government committed 23 billion rand (about 1.6 billion dollars) to be allocated to Eskom over the next three years in the current fiscal framework.
Staggering under a heavy debt of 450 billion rand (about 31.6 billion dollars), Eskom, which provides more than 95 percent of the electricity consumed in South Africa, has been unable to provide sufficient electricity for the past decade, particularly for the past recent years when constant load shedding is implemented across the country.
The utility, crippled by poor management and alleged corruption, is seen as the biggest risk to the fiscal framework because of its financial problems and negative impact on the economy. Also on Tuesday, Eskom reported a record loss of 20.7 billion rand (about 1.45 billion dollars) for the year to March, highlighting the severity of the threat it poses to South Africa’s economy. The government said it is urgently working on stabilizing the utility, while developing a broad strategy for its future to prevent it from collapse.
