Public Enterprises Minister Pravin Gordhan
Photo by: Dylan Slater
Public Enterprises Minister Pravin Gordhan said on Tuesday that Eskom’s financial and operational problems were unlikely to be solved without structural changes being made at the State-owned electricity utility.
Speaking as part of a panel discussion at Business Unity South Africa’s inaugural Business Economic Indaba, Gordhan said the recent period of State capture left the South African government with “a bit of a disaster on our hands”.
The fiscus did not have capacity “for endless bailouts”, which meant that government was considering major restructuring of Eskom and several other State-owned companies (SoCs), some of which were currently struggling to pay salaries every month.
In the case of Eskom, a task team had been established by President Cyril Ramaphosa in December to assess its future sustainability and was due to report this week.
“Should Eskom be unbundled into generation, transmission and distribution, as is the worldwide practice? And, what are the pros and cons of that?” Gordhan asked rhetorically.
“It’s the debate we are going to have soon. And, its going to go beyond a debate, because we need very fast movement if we are going to have Eskom as a credible entity, both operationally and financially, even in a month’s time. But you will hear about this in due course.”
The Minister also hinted to a major overhaul of how the South African government managed its entire SoC portfolio, revealing that he had recently met China’s State-owned Assets Supervision and Administration Commission (Sasac) to gain insight into how it was managing the 96 large SoCs falling under its control.
The interaction demonstrated to him that “South Africa is too stuck in old language and old paradigms” when it came to the way it debated issues such as privatisation. For instance, Sasac no longer took majority positions in manufacturing entities, but retained full ownership of strategic assets, such as the State Grid Corporation of China.
Government, Gordhan said, had already determined that it would consider strategic equity partnerships at some SoCs to relieve pressure on the fiscus. “Once we have the right level of stability at these entities, we will certainly move in that direction.”