Privatising Eskom would be a mistake – Lynne Brown

2014-08-05 18:29

Debates on the privatisation of Eskom are misguided as Cabinet has not discussed privatisation of the power utility.

“I want to indicate that there is a portfolio of options for the interministerial task team to consider. To my knowledge Cabinet has not discussed the matter of privatisation and there is no need to unnecessarily raise temperatures around this matter,” said Public Enterprises Minister Lynne Brown today.

Today, Business Day reported that a team of Cabinet ministers and government officials were looking into the restructuring of Eskom’s business, which included selling some of its power stations to private investors.

The options being discussed by the ministerial team representing energy, public enterprises and the treasury, have not been made public, reported the newspaper.

Brown told the newspaper it would be “premature to make pronouncements until completion of the process”.

A chief executive for Eskom would be appointed shortly to advance discussions on Eskom’s “end state,” said the publication.

Brown said it would be a mistake to privatise Eskom.

“Eskom is critical for government to implement its developmental agenda. It would be a grave mistake to privatise this critical player in the economy,” she said.

On July 28, the power utility painted a gloomy picture of its books, telling MPs it faced a R225 billion revenue shortfall, partly as a result of being granted lower-than-expected tariff increases by the National Energy Regulator.

Eskom has been asking for an equity injection of at least R50 billion to solve its cash-flow problems.

On July 30, Nersa announced it had approved the regulatory clearing account (RCA), paving the way for Eskom to raise electricity tariffs next year.

The RCA is a regulatory mechanism that allows Eskom to adjust for over-or under-recovery of revenue, as initial price determinations are based on projections and assumptions.

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