Heavily indebted power company Eskom has been damaged by years of mismanagement and over-spending (MARCO LONGARI)

Johannesburg (AFP) – South Africa announced Tuesday a 59 billion rand ($4.2 billion) bailout for the debt-laden Eskom power supplier, with the finance minister admitting the emergency funding would sting taxpayers.

The state-owned utility, which generates 90 percent of the nation’s energy, has debts of $30 billion, and its potential collapse is seen as the biggest threat to Africa’s most developed economy.

Finance Minister Tito Mboweni told lawmakers in Cape Town that Eskom would get 26 billion rand this financial year and 33 billion rand in 2020-21 to try to enable it to remain solvent.

The bailout comes just five month after an even bigger cash injection was announced over the next three years for the ailing company.

“The fiscal support we are announcing today will come at a significant cost to the fiscus (government) and to South African taxpayers,” Mboweni said.

“Without major changes to Eskom’s business model, the company will not be financially sustainable and may not be able to ensure security of electricity supply.”

Eskom has been damaged by years of mismanagement and over-spending.

It imposed a period of rotational power rationing in February, plunging offices, factories and homes into darkness for long hours and sparking public anger at the ANC government.

President Cyril Ramaphosa warned last month that Eskom faced potential collapse but that it could not be allowed to fail.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.