EEC’S E65M ‘BAILOUT’ TO GOVT

MBABANE – As government continues to experience financial struggles, public enterprises now seem to be the administration’s major source of bailout.

It has since come to the fore that government has received financial assistance to the tune of E65 million from the Eswatini Electricity Company (EEC) – a Category A public enterprise. The money was given to government between the months of April and June, which is the first quarter of government’s financial year. This information has been disclosed in the senate portfolio committee on finance (first quarter performance) report dated September 10, 2019. Minister of Finance Neal Rijkenberg reported to the committee that the money from EEC came in the form of a pre-dividend. While a dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits, a pre-dividend, on the other hand, is payment to shareholders before profits are declared. The country’s public enterprises, in the payment of such dividends, are guided by the Dividend Policy of 2015.

This policy describes dividend as ‘the distribution of value to shareholders’ and also has provision for ‘cash dividend’ which it explains as ‘money sent to the shareholder through mail or directly deposited in his/her bank account’. There is also what is called ‘final dividend’, which is the dividend paid as the final payment by a company for a particular financial year. Further, the policy includes a ‘special dividend’, which is described as ‘an exceptionally large dividend paid on a once-off basis from retained earnings or reserves’. The special dividend ‘is also a return of money invested by shareholders which is tax-free when there is sale of business or liquidation of investment’. There is no provision of a ‘pre-dividend’ but there is what is called an ‘interim dividend’.The policy allows government to seek an interim dividend that is payable from the estimated profits of a public enterprise for the first six months of a financial year, after provision has been made for any tax equivalents payable in respect of that six-month period. “This interim dividend will be 50 per cent of the target dividend payment for that year,” reads the policy.

‘Govt requests help’

Impeccable sources told this publication that the E65 million was neither an interim dividend nor a special dividend.

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