Government does not intend to sell Eskom, says Mabuza

Deputy President David Mabuza says the government does not intent to sell Eskom, despite its many challenges.

Mabuza was responding to EFF deputy president Floyd Shivambu’s question in the National Assembly on Thursday, on Eskom management’s plans to ensure that the entity stays afloat financially.

“We understand that this criticism stems from load shedding and South Africans should understand that the leadership of Eskom found a utility, found this plant not in a good state in terms of maintenance. What is currently happening is that as this leadership plans how to maintain this plant, there is unplanned outages that disrupt the entire plan,” he said.

“I’m happy that they’re managing the process and are bold to announce when there are unplanned outages and don’t hide the truth from all of us. This is what is good about this leadership and I think we should support the Eskom board and administrative leadership. There is no intention on the side of government to sell Eskom. It must be supported like we’ve done so. It’s very important in the life of the economy of the country. I don’t hear anything in our vocabulary about selling Eskom.”

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Mabuza said the underlying message in Finance Minister Enoch Godongwana’s Medium Term Budget Policy Statement was that it is fiscally unsustainable to continue bailing out state-owned enterprises in the context of diminishing fiscal resources and competing developmental priorities.
 
“Instead, any form of support provided must focus on transforming these SOEs, and ensuring that they are put on a path of financial and operational sustainability in a manner that does not require constant bailouts from fiscal resources,” said Mabuza.
 
The Eskom Political Task Team has been, according to the deputy president, focused on supporting Eskom in the implementation of its turnaround plan aimed at repositioning power utility, improving operational efficiencies, plant maintenance, and ensuring that debt and liquidity challenges are addressed. 
 
While Government will continue to provide necessary support required, the Eskom leadership, including the Board, has a primary responsibility to drive organisational change, effect governance improvements and ensure that the organisation is placed on sound financial footing, said Mabuza.
 
“In terms of the recent announcement by the Minister of Finance, there will be no negative implications for Eskom as this will not negatively impact what has already been provided in the current fiscal framework in terms of the 230 billion Rands support package announced in the October 2019 Medium Term Budget Policy Statement.  To date, 136.7 billion Rands of this support has been disbursed to Eskom, with the remaining disbursements to be provided over the next 4 fiscal years.

“The Minister of Finance has approved a special dispensation to allow Eskom to access additional guaranteed debt of 42 billion Rands in 2021/22 and 25 billion Rands in 2022/23, which falls within its existing guarantee facility.
 
“This approval will enable Eskom to execute its borrowing plan and honour its obligations as they become due. In addition, Eskom has been allocated 21.9 billion Rands in 2022/23 and 21 billion Rands in 2023/24 to assist with the redemption of debt and interest.
 
Eskom continues to implement various levers to improve internal efficiencies and ensure that it reduces its cost structure while enhancing its capabilities to deliver on plant maintenance, and new build programmes to keep the lights on.  While challenges remain, there is discernable progress in some of the key areas of organisational transformation, including financial savings and the recruitment of management and technical skills required by the organisation.”

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In terms of municipal debt, Mabuza said Eskom is implementing the Active Partnering Model to assist municipalities with maintenance of infrastructure and revenue collection to enable the payment of the bulk electricity account.

“Alongside all these support interventions, various models and options are currently under consideration to resolve the current debt challenge facing Eskom. Once finalised, Government will make announcements accordingly.”