ANC agrees to look into selling shares to fix Eskom
Breaking up the power utility into generation, distribution and transmission units is at core of restructuring plan
The ANC has agreed that the selling of shares is another option which should be explored to fix Eskom’s balance sheet, which would include the participation of development finance institutions.
The party described the situation at Eskom as a “serious threat” to the government and the economy as a whole at its national executive committee lekgotla at the weekend.
While there were other proposals on the table signed off by the meeting, the restructuring of Eskom, breaking it up into generation, distribution and transmission, is at the core of the plan which was agreed upon to rescue the power utility.
According to the ANC’s economic resolutions agreed to at the lekgotla, the party went as far as calling for the assets of the former Gupta-linked company Tegeta to be “expropriated” to recoup money lost through alleged corrupt coal deals.
Also agreed to was that tariffs should be managed responsibly so as not to harm the economy and the poor. Nonpayment of debt by municipalities to Eskom should also be addressed. A share scheme, which could involve development finance institutions, was also among the resolutions to address its debt crisis.
The lekgotla was briefed by a task team of experts set up by President Cyril Ramaphosa to guide the government on a way forward for the company. The government was tasked by the lekgotla to consult various stakeholders, particularly the trade unions, on a plan to pull Eskom back from the brink.
Eskom is in a deep financial crisis and is unable to pay the interest on its R419bn debt from the revenue it generates. The power utility is acknowledged as the single biggest risk to the SA economy by the Treasury, credit ratings agencies and the investment community.
After Business Day reported on the potential breaking up of Eskom on Wednesday, unions criticised the move, saying it was “setting the stage for privatisation”.
National Union of Metalworkers of SA (Numsa) general secretary Irvin Jim said unions have not yet been consulted on the breaking up of Eskom.
“It sounds ideologically like liberalisation and privatisation … and the private sector gets involved only for one mission and one mission only, profits,” he said.
Jim said workers have a “stake and a say” and should lead the process.
The union has ideas of its own on how Eskom should be fixed. Numsa and the National Union Mineworkers agree that the agreements signed with independent power producers should be renegotiated.
Jim said the agreements with independent power producers signed in 2018 should be cancelled. He also suggested that Eskom should force its coal suppliers to accept no increases in the real price of coal, as well as reducing the top executives from 600 to below 200 to cut costs.
“Eskom has to increase its sales both locally and cross border. We believe Eskom has failed dismally to increase its sales revenue because it is distracted and has the wrong focus,” Jim said.
A cabinet lekgotla will take place over two days next week to iron out the government’s strategy on Eskom and a plan is expected to be announced in Ramaphosa’s state of the nation address on February 7.