(Bloomberg) -- South Africa’s government plans to restructure state power utility Eskom Holdings SOC Ltd.’s debt before elections in 2024, and will only provide additional support if the company sells assets and cuts jobs, Finance Minister Enoch Godongwana said.

Eskom, which supplies almost all of South Africa’s power, has 392 billion rand ($26 billion) of debt. The utility has said the liabilities need to be cut to 200 billion rand for it to be sustainable and accept support pledged by rich nations to help reduce South Africa’s dependence on coal and cut carbon emissions.

While local authorities are discussing whether the state should assume all or part of its debt, government support hinges on Eskom getting its “house in order,” Godongwana said Wednesday in an interview in Cape Town. 

The company has got “10,000 people in the system that they don’t need” and it needs to sell some of its coal-fired power plants and its mortgage book, he said. “After that, I become the last resort -- I’m not saying I’m not going to help them,” the minister said.

President Cyril Ramaphosa’s government has been promising since 2018 that it will come up with a plan to deal with Eskom’s debt. Ramaphosa’s mandate ends in 2024, when the country holds its next presidential elections.

Eskom is considering offloading non-core assets to reduce its liabilities, and said in March it’s disposing of Eskom Finance Co., which provides home loans to employees. Selling the coal-fired plants could jar with the pledge by wealthy nations to provide $8.5 billion to fund the nation’s energy transition, which is predicated on closing them down. 

The power utility’s financial woes, caused mainly by a massive overspending on the construction of two of the world’s biggest coal-fired plants, have led Eskom to cut expenditure on maintenance and new capacity. As a result, the country has been beset by intermittent power outages for more than a decade, with the number of blackouts rising to a record last year.

Eskom poses a significant risk to South Africa’s public finances, with the government guaranteeing as much as 350 billion rand of its debt -- about 80% of that facility has been used. Shifting Eskom’s obligations onto the state’s balance sheet would precipitate a marked deterioration in government debt that is now seen peaking at a lower level and a year earlier than previously expected.

Other highlights from the interview:

  • Godongwana would like to lower the corporate tax rate further to attract investment but that would be contingent on broadening the tax base. The minister announced earlier on Wednesday that the rate will be cut by 1 percentage point to 27% in April.
    • “Ideally we want to get to a level where we are competitive on the tax with peer economies.”
  • Godongwana confirmed he has signed off on an $800 million World Bank loan that will be used to fund purchases of items including vaccines and medicines.
  • The minister said welfare grants are crowding out investment, while doing little to bolster support for the ruling party.
    • Introducing more permanent welfare measures, such as a basic income grant, will require trade-offs such as cutting the expanded public works program, which includes spending on infrastructure and community projects to boost employment.
    • “I am not scared of a basic income grant. It’s going to depend on the level at which to pitch it.”
    • Godongwana intends to convert the government’s employment tax incentive into a vocational training grant to help unemployed youth with tertiary qualifications to get jobs.
  • Godongwana said he is on the road to recovery after experiencing some health problems last year.

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