Gordhan says draft Eskom unbundling White Paper to be finalised soon

11th July 2019 By: Terence Creamer - Creamer Media Editor

Gordhan says draft Eskom unbundling White Paper to be finalised soon

Public Enterprises Minister Pravin Gordhan
Photo by: Creamer Media

Public Enterprises Minister Pravin Gordhan says a draft White Paper outlining government’s approach to the unbundling of State-owned power utility Eskom, as well as how its “unsustainable” debt burden will be managed, is being prepared and should be finalised within weeks.

Gordhan made the remarks ahead of his Budget Vote address, which was initially delayed when members of the opposition Economic Freedom Fighters (EFF) threatened the Minister with physical violence in an attempt to prevent him form speaking.

In his formal remarks, made after the EFF members were ejected from the chamber, Gordhan said the paper would outline South Africa’s future energy environment, as well as the envisaged financial arrangements for Eskom.

It would also address the utility’s indebtedness and its restructuring, as well as identify cost-saving opportunities in the areas of coal, staffing and capital efficiency.

Operationally, the paper would assess whether the utility could sustain a higher energy availability factor.

In February, President Cyril Ramaphosa announced that Eskom would be broken into three separate State-owned entities of generation, transmission and distribution.

Later Finance Minister Tito Mboweni made a proposed R23-billion a year fiscal injection into Eskom, over ten years, conditional on the restructuring and said that a chief restructuring officer (CRO) would be appointed to oversee the process.

Gordhan described the appointment of the CRO as a priority and said that the appointment “will be announced shortly”.

In his Budget Vote, Mboweni said that the terms of reference and scope of work for the CRO had been developed in consultation with the Department of Public Enterprises.

He added that a Special Appropriation Bill would be introduced to Parliament on July 23 to make available additional funding for Eskom for the current and next financial years.

Once the yearly Appropriation Bill was law, additional financial support would be provided to other cash-strapped State-owned enterprises (SOEs), such as South African Airways, the South African Broadcasting Corporation and Denel, from the contingency reserve.

Mboweni stressed that this additional support could not be perceived as "a blank cheque".

"We really and truly cannot go on like this. A broad strategic framework in the form of a Green Paper, which will culminate in a White Paper, will be published. This will deal with the future that government expects SOEs to play in a fast-changing micro- and macro-economic environment."

Despite a planned injection of R230-billion into Eskom, Gordhan said the scale of Eskom’s financial problems, together with those of other SOEs, meant that further “extraordinary” measures might be required to stabilise their finances.

Such measures could include the sales of noncore assets, Gordhan confirmed.