Eskom is due to announce its annual financial results this week. They will be dire - but not as dire as they would have been had the government not agreed to hand over almost R130bn of taxpayers' cash to the power utility over the next couple of years.
Without the massive bailout, Eskom's auditors would not have been able to sign off its accounts because of doubts about its "going concern" status. That's clear from finance minister Tito Mboweni's statement this week, in which he says the additional R59bn of financial support, over and above the R69bn granted in February, would address Eskom's going-concern status.
If the auditors express doubts that a company can continue as a going concern, no lender is going to lend to it (a scenario which could be catastrophic for debt-dependent Eskom, and for the government, which has guaranteed more than half of the power utility's debt).
It's a financial disaster, but the problem is not fundamentally a financial one nor simply an Eskom one: rather, it is a symptom of policy failure by a government which, over more than two decades, has held back from committing to, and implementing, a clear and viable policy framework for the electricity industry. Corruption and bad governance came on top of that.
R130bn
What the government has agreed to give Eskom over the next couple of years
Nor is the government making those policy moves now. Market players had been led to believe that this week's bailout package would come with documents detailing plans to restructure Eskom's debt and its operations, along with an announcement on the appointment of a chief restructuring officer to start the process of unbundling Eskom which President Cyril Ramaphosa promised in February. But there was none of this, and clearly still no political consensus.
That suggests the bailout may prove to be just another tranche in an ongoing subsidy for Eskom. For rating agency Moody's, that there is "no clear strategic turnaround plan agreeable to all stakeholders" is a credit negative, fuelling the risk that the government will have to provide yet more support.
More immediately, Mboweni will have to conjure up extra money from the national budget for Eskom. Add to that another revenue shortfall, in a weak economy, and we are looking at a fiscal deficit nearer 6.5% than the 4.5% projected in the budget, with the national debt climbing ever higher.
The cost to SA could come in higher taxes, electricity prices and borrowing costs. It's now only a matter of time until SA loses its last investment-grade rating, with Moody's almost certain to put the rating on negative outlook in November, if not before.
The prospect is already driving the rand down and the cost of borrowing up. The bailouts for Eskom and other SOEs recognise that the government will have to subsidise them for the foreseeable future if it is not going to restructure their sectors. Whether SA is willing to continue paying is a debate we need to have.
• Joffe is a communications consultant and freelance journalist
