ESKOM Privatisation considered

South Africa is finally considering either partially privatising Eskom or putting up some of its assets for sale in order to secure funding for the power producer and resolve an energy crisis, the Treasury said yesterday. The proposal could revive previous plans to raise funds for the company, which is battling the worst power supply shortages since 2008 and faces a funding crunch as it races to bring new power plants online.

“Given Eskom’s constrained balance sheet and government’s constrained fiscal position, there is a need to explore all options,” the Treasury said in a statement. “Consideration is being given to ring-fencing and selling stakes in Eskom’s non-core businesses or power stations as well as into Eskom’s business as a whole.” The government would still retain control of the company, the statement said, and authorities would also consider amending regulations to allow private firms to generate electricity for their own use and sell any surplus to the national grid.

Another option could be increasing private generation by independent producers. Some 5.2 GW has already been procured through that initiative.The Business Day daily reported on Wednesday that Treasury Director General Lungisa Fuzile had said government had revived a discarded policy that stipulates the private sector could take a stake of up to 30% in Eskom’s power-generating assets.

Suspended Eskom CEO Tshediso Matona said in March the power firm may sell assets to raise capital. Left-leaning elements within the ANC and unions have opposed privatisation of Eskom, arguing it would lead to job losses and undermine efforts to expand grid access to more South Africans. Eskom’s funding gap to 2018 is estimated at ZAR 200bn and the utility expects to receive a ZAR 23bn cash injection from the government this year.

The utility has applied to the energy regulator to hike electricity prices to 25.3% from July this year. Its spokesperson said this could earn Eskom nearly R40bn if approved. The energy regulator said also yesterday it would hold public consultations on Eskom’s application and a decision will be made by end June, with any price increases likely to come into effect by September.

*WE SAY:* NERSA better be prudent about this issue. Another electricity price hike would set a significant number of individual and small business tumbling down the debt-spiral. The incompetence, mis-management and exorbitant top-executive salaries cannot be compensated to the detriment of the consumer. But there is no need to privatise ESKOM _in toto_ as for example the sale of their transmission network (powerlines) would be a good starting point. They would be owned and managed better by a private company.

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