Markets will be watching Wednesday's cabinet meeting closely for signs that the government has taken some urgently needed decisions on Eskom and the electricity industry.
The hope is that both the long-awaited energy blueprint and the much-anticipated paper on Eskom's restructuring could be published as early as this week.
President Cyril Ramaphosa promised parliament this week that the special paper on Eskom would be released before the medium-term budget policy statement at the end of the month.
Ramaphosa also said the process to appoint a new group CEO for Eskom would soon be concluded. And though plans to unbundle Eskom into generation, transmission and distribution subsidiaries have faced pushback from unions, Ramaphosa said the restructuring process is under way.
Also this week, mineral resources & energy minister Gwede Mantashe told a wind energy conference that the government's integrated resource plan (IRP) will be taken to Wednesday's cabinet meeting. If approved it will be gazetted, providing certainty to the industry.
The IRP, which sets out SA's planned mix of new electricity generation, has been the subject of intense controversy over the proposed mix of renewable energy, nuclear power and coal in the plan and has long been awaited by private sector investors.
With this week's meeting likely to be the last full cabinet meeting before the budget on October 30, market players are keen to see what the government proposes to do about Eskom's crippling R440bn debt, and what implications this will have for SA's sovereign balance sheet and its credit ratings, as well as what's to be done to cut costs and turn around its performance.
Investors are expected to respond negatively if the cabinet comes out with nothing on the IRP or Eskom this week.
RMB economist Kim Silberman said: "Markets would be disappointed and that would be reflected in the price of bonds and the currency, as a negative outlook from Moody's in November becomes more likely."
This week the Treasury unveiled the extensive list of conditions it proposes to impose on Eskom in return for the additional R59bn bailout it granted the power utility in July, over and above the R69bn bailout granted in the February budget.
Ironically, the bailout conditions came in a week in which Eskom has taken the National Energy Regulator to court to challenge a decision that means Eskom does not get the full benefit of the bailout money.
The regulator's most recent tariff decision deducted the bailout from the returns allowed to Eskom for the next three years.
The decision leaves Eskom with a R102bn shortfall compared to the revenue it applied for, and it has gone to court to "avoid financial disaster", said Eskom CFO Calib Cassim.
"Nersa's deduction of the financial support announced by the shareholder . defeats the whole purpose of the government support," Cassim said.
Among the conditions the Treasury has imposed on Eskom are that it cannot pay any incentive bonuses to executives in years in which it receives bailouts. It must report monthly on initiatives to cut its primary energy costs (which include coal) as well as on measures to improve its energy availability factor (which shows how much its power stations are able to generate).
It must provide a detailed cost, timing and benefit plan for the completion of the Kusile and Medupi power stations and a report on defects in the build programme and how they will be fixed. The conditions require the department of public enterprises to appoint a permanent CEO, strengthen the board and publish the special paper.
A ranked list of three names for the CEO position is believed to have been submitted by Eskom's board to public enterprises minister Pravin Gordhan, and may have been shown to the presidency. There are hopes it, too, will go to the cabinet this week
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