Why Eskom is considering private investors

VENTURES AFRICA – Eskom. the embattled power producing company for South Africa, Africa’s most advanced economy, is contemplating offering 30 percent of its power generating assets to the public. This move is part of an effort to salvage the cash-strapped utility company, which has been struggling with a power supply shortage since 2008.

Yesterday, the director general of treasury, Lungisa Fuzile stated after a meeting with the parliamentary committee on finance that the government will be revisiting the discarded 1990s policy, which allows the private sector a 30 percent stakes in government controlled companies. “The Treasury has been asked by a committee of Cabinet to look into how this could be done and whether, in the case of Eskom, it would be more feasible to do it in relation to power stations or the entirety of the balance sheet of the entity,” reported Business Day newspaper, quoting Fuzile. The private sector is currently involved in the financing of Eskom but only through debt, the treasury manager added.

Both options, according to him, are still under deliberation by “war room” and does not have a deadline attached to its confirmation. An unbundling of the power sector monopoly will not only attract capital investment from international partners, but help generate a R23 billion windfall. This will go a long way in raising the cash shortfall facing the broke company.

As a means of generating more funds, Eskom, which recently implemented the first stage of its load shedding, has applied to the National Energy Regulator of South Africa (NERSA) to increase electricity charges by 25.3 percent. If approved, the company will earn more than $3 billion from the price hike.



By Tobi Eyinade