And as Eskom lurches from crisis to crisis, so the privatisation debate has resurfaced. It dates back to Thabo Mbeki’s “managed liberalisation” policy, which was supposed to usher-in the privatisation of several state-owned entities.
The most notable result of that policy was the listing of Telkom more than a decade ago.
I can still remember the press conference when Jeff Radebe – then Minister of Public Enterprises and now the Minister in the Presidency tasked with improving the efficiency of state assets – presented government’s position on the Telkom listing. There was excitement in the air with the anticipation that the listing of Telkom would open the privatisation of several other major state-owned companies.
An enthusiastic Radebe said: “Government will raise optimal funds from the listing which will go a long way towards increasing social expenditure, without creating any debt.” Unfortunately, this “managed liberalisation” process came to an abrupt halt as those opposed to “neo-liberal” economic policies gained ascendancy within the ANC.
SA’s electricity supply situation would have been different today had Eskom followed in Telkom’s footsteps. Telkom’s listing was by no means a perfect transaction, but at least it initiated some deregulation.
More importantly, following the Telkom listing, the company has not sucked funds from the fiscus. The road has been rocky, but under CEO Sipho Maseko, Telkom looks set to regain some dignity. This went down the drain in the late nineties and first decade of the next century as inefficiency and a ghastly customer service ruled supreme.
At the end of its 2015 financial year Telkom may even restore its dividend payments; it last paid a dividend in 2011.
ANC secretary-general Gwede Mantashe has strongly denied an equity sale of Eskom is a form of privatisation, but should rather be seen as a capital-raising exercise.
He said the ANC remains fundamentally opposed to privatisation. Instead the government is considering the Chinese option of selling minority stakes in many state-owned companies, but retaining control.
Relinquishing absolute control is an ideological shift that could (and should) also open the door to further deregulation of the energy sector. This is essential if government wants to see investment. This would go some way to relieving the acute pressure on Eskom.
I believe there is bitter objection to even the sale of a small stake in Eskom from the ANC’s socialist comrades. I hope these same parties come up with clever alternatives when Eskom pleads for another price hike.
The time has come for government to have faith in itself and act decisively.