South Africa will not privatise Eskom

15 May 2015

Minister of Public Enterprises Lynne Brown has ruled out the privatisation of basic services, such as the provision of electricity and water, and has said load shedding will continue for three more years.

Until the "end-state" of Eskom was clarified "we can't say what parts should go where", said Brown, who was speaking at a media briefing ahead of her budget vote in the National Assembly on 14 May.

Reuters reported on 13 May that South Africa was 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.

Quoting a statement from the National Treasury, it said South Africa was considering ring-fencing and selling stakes in the state power utility as it sought to secure funding for the power producer and resolve an energy crisis.

"Given Eskom's constrained balance sheet and government's constrained fiscal position, there is a need to explore all options," the Treasury said. "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."

However, Brown was emphatic that she did not believe one should change the state-driven ownership model "for now� until you know what you are working towards. You can't make a decision [about] what happens to Eskom or any of the other state-owned companies [until then]".

My long politician's answer

Turning to what she called "my long politician's answer", namely the question of what could be privatised by the state, Brown said: "Basic services must be provided by the state. How private companies and the private sector interact with that is part of what we are trying to do now. [But] we must be able to remain in charge as a state, for want of a better word."

Turning to the troubled Eskom, Brown said that even "in the deepest difficult time" � apparently referring to load shedding � Eskom had been able to connect 160 000 households with electricity.

"It [Eskom] can�t be driven by capital� or profit," she said, noting that it was the state's responsibility � through Eskom as a commercial venture � to carry out the developmental responsibility.

While acknowledging that load shedding would continue for the next three years, the minister said that some Eskom achievements "seemed to have been lost in the avalanche of publicity about other matters".

"Today, I am very pleased to announce that the ramp-up towards full output at Medupi has passed the 700MW milestone. When fully operational by the end of June 2015 as promised, it will deliver the equivalent of more than 40% of the output of the Koeberg Nuclear Power Plant."

Scheduled maintenance of Koeberg's Unit One was well on track and was expected to bring more than 900MW back to service by the end of May.

Eskom build programme

"Looking ahead I have tasked the leadership of Eskom to accelerate the completion of the build programme, with improved project management, contracting and increase the generation capacity of the existing fleet," Brown said.

The state-owned companies under her department � Eskom, Transnet, Denel, South African Express, Safcol and Alexkor � had combined annual revenues of over R200- billion, she said, and would contribute the lion's share of the state's investment in infrastructure of more than R330-million a day every day over the next three years.

"In conclusion, I want to say that over the next five years the highest priority goals which the department and I are required to drive are set out in the National Development Programme-rooted Medium-Term Strategic Framework. Foremost among these are critical initiatives to lower the cost of doing business to stimulate job-creating growth and to increase the efficiency of the economy:

First, ramp up the electricity generation reserve margin from its current levels to 19% by 2019;
Second, increase the tonnage moved on rail from the current 207 million tons to 330 million tons by 2019;
Third improve the operational performance of sea ports and inland terminals by increasing the average gross crane movements per hour by 25% by 2019; and,
Fourth, use the Eskom and Transnet infrastructure development and replacement investment spend to drive the overall national investment rate to 25% in a way that crowds in private sector investment and creates opportunity for new suppliers and sectors."

Source: SAinfo reporter and News24Wire