Photo by: Bloomberg
Finance Minister Tito Mboweni has called for a reconfiguration of South Africa’s debt-laden State-owned companies (SoCs) and has appealed to stakeholders to adopt an open mind with regard to the form such restructuring could take, particularly in the cases of Eskom and South African Airways (SAA).
Briefing the media as part of the release of his maiden Medium-Term Budget Policy Statement (MTBPS), Mboweni said that SoC reconfiguration could take various forms from equity partnerships and asset sales, to the closure of certain enterprises.
He indicated that changes in the electricity sector might require a separation of Eskom’s generation business from transmission and distribution, as well as the creation of an independent grid company that could “hook up” the generation assets of Eskom and independent power producers.
He called for “modern” thinking on the role and configuration of the country’s SoCs, warning that unless “we progress to the WiFi generation, we will be stuck in the 1950s”.
The MTBPS documentation noted that the Eskom board was preparing a long-term turnaround strategy to be presented to government in November 2018.
"Restructuring of the electricity sector is under way. This must include a long-term plan to restructure Eskom and deal with its debt obligations. A review of the current Electricity Pricing Policy will form a part of this process," Mboweni added in his speech.
It also highlighted the fact that several other entities had updated their turnaround strategies in recent months. It nevertheless stressed that the finances of major SoCs remained weak.
On SAA, the newly appointed Minister said there “should be no holy cows”, while confirming additional funding of R6.2-billion for both SAA and South African Express.
“Minister [Pravin] Gordhan and I are working closely to limit the fiscal cost of these measures. By the end of the year, the boards of these two companies will present plans to strengthen and align their operations.”