Rob Davies. Picture: BUSINESS DAY
Rob Davies. Picture: BUSINESS DAY

The government will soon unveil its plans around the heavily indebted Eskom, trade and industry minister Rob Davies said on Tuesday, as the chorus of warnings about the risk the parastatal poses for the entire economy grows.

The Minerals Council SA, which represents 90% of SA’s mineral production by value, has said that if Eskom is granted permission to raise its tariffs by 15% or more a year for the next three years, a third of the country’s 450,000 miners will be out of work.

Eskom — which warned of its losses deepening to R20bn in the financial year to March and a debt R419bn that its cash flow is unable to service — is regarded by many businesses as the single biggest threat to SA’s economy.

“It’s no secret that Eskom is in deep trouble operationally and financially. But what I can say is that in addressing this we have to grapple with the real problem and not put it aside,” Davies said at a mining investment conference on the sidelines of the Mining Indaba in Cape Town.

“We’ll see some announcements in the near future that will indicate we are going to seize the bull by the horns and take really difficult decisions. We have to make sure that, as we make these tough decisions, we are aware of the trade-offs and that, as far as possible, we try to provide reasonable prices and reliable electricity to users in this country.” 

President Cyril Ramaphosa is expected to unveil the government’s plans around Eskom at his state of the nation address on Thursday evening. The plan is anticipated to entail separating the generation side of the business, which has 45GW of installed power, from its transmission business.

Minerals Council CEO Roger Baxter recently said that global best practice was for power to be generated by private companies competing on prices and reliable delivery.

Mineral resources minister Gwede Mantashe has spoken repeatedly at the Mining Indaba of the government potentially introducing an administered pricing regime for electricity, rail and ports to stimulate mineral production and beneficiation to encourage the export of higher value finished products instead of just selling ore.