The South African government and the Eskom board had given the executive at the State-owned enterprise a mandate to probe raising the stake available to the private sector in the Kusile power station from 30% to 49%, interim chairperson and CEO Mpho Makwana revealed last week.

The 4 800-MW coal-fired power station was currently under construction in Mpumalanga province and Eskom indicated late last year that it would be seeking private investors to help it fund the R142-billion facility.

Responding to a question raised by Thembani Bukula, the chairperson of the National Energy Regulator of South Africa’s (Nersa’s) public hearings into an application by Eskom for tariff increases of 35% a year between 2010 and 2013, Makwana said that a larger stake might be on offer.

Bukula had asked whether any further 
assets might be sold to help the utility deal with its considerable funding challenges with regard to its R400-billion build programme.

In reply, Makwana stressed that it had not yet received a mandate from its board or its sole shareholder, the South African government, to increase the stake beyond the 30%, or the R40-billion, level first mooted. However, it had been given permission to test the viability of raising the interest on offer to 49%.

He also stressed that it should not be seen as a privatisation exercise, but rather as an 
attempt to secure funding to ensure that “the lights remain on”.

In its submission to Nersa, labour federation the Congress of South African Trade Unions rejected the sale of any interest in both Eskom and Kusile, arguing that the sale of an interest 
to a strategic equity partner was tantamount to privatisation – a policy that it had always eschewed.

Makwana indicated that the sale of equity 
would involve a complex process and there might be more potential for attracting a partner if a bigger stake were made available. But he rejected the notion that the resulting 
public–private partnership (PPP) could be considered to be privatisation.

A request for proposals for a transaction 
adviser to support Eskom in pursuing what would arguably be the biggest PPP ever under-
taken in South Africa would be issued before the end of this month.

Eskom hoped to have identified its preferred adviser by the end of February, whereafter the sale options and process would evolve over an 18-month period.

Makwana said that Eskom did not envisage any other partnerships or asset disposals 
until the Kusile PPP had been finalised. 
He also said it would be more appropriate for a permanent CEO to lead such a far-reaching initiative.

Eskom, which is also without a permanent chairperson after Bobby Godsell stepped down last year in the wake of a leadership wrangle that also saw Jacob Maroga leave the organisation, has set a deadline of March 31, 2010, for securing a new CEO.

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