Eskom Holdings SOC Ltd., South Africa’s state power utility, has formally requested the National Treasury to convert a substantial R16 billion bailout into equity, according to sources familiar with the matter.

During an investor call on Wednesday, Eskom officials confirmed the application for the conversion of the subordinated loan into equity has been submitted, with a decision anticipated in the near future. The move is part of a broader R254-billion government bailout aimed at halting the decline in Eskom’s operational performance, a decline that has resulted in widespread power cuts across the nation.

Both Eskom and the National Treasury have refrained from offering official comments on the matter, leaving investors and the public awaiting further developments.

The subordinated loan, designed to be convertible into equity under specific conditions, is a key component of the larger bailout package extended by the government. The financial injection is intended to arrest Eskom’s deteriorating performance, which has been a primary factor behind the persistent power shortages plaguing the country.

A successful conversion of the bailout funds into equity would provide Eskom with much-needed relief, mitigating the heavy debt-service burden that has hindered the utility’s ability to conduct essential maintenance activities. Eskom has struggled with maintaining its infrastructure, and the consequences of this neglect were highlighted in its recent first-half results presentation, where the company disclosed a looming seventh consecutive annual loss.

During the presentation, Eskom acknowledged its ongoing efforts to convert the loan, though specific details, including the exact amount and whether an official application had been submitted, were not disclosed.

As Eskom navigates through financial challenges and strives to secure a sustainable future, the outcome of the application and the subsequent decision from the National Treasury will play a crucial role in determining the utility’s trajectory in the coming months. The broader implications of this financial maneuver will also be closely watched by investors, government officials, and the South African public at large.