Mashatile proposes Eskom split, some private equity investment

2018-07-24 18:57
ANC treasurer general Paul Mashatile addressing the Cape Town Press Club. (Paul Herman, News24)

ANC treasurer general Paul Mashatile addressing the Cape Town Press Club. (Paul Herman, News24)

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ANC treasurer general Paul Mashatile has proposed that the solution to the challenges currently facing Eskom might be splitting the state-owned enterprise's (SOE) functions into three.

Mashatile was addressing the Cape Town Press Club at Kelvin Grove in Newlands on Tuesday, and fielded multiple questions on the economy and ailing SOEs.

The ANC top six member was frank about Eskom and other SOEs' problems.

"Yes, it is true that Eskom's debt goes to R300bn. Obviously, we [as the ANC] don't think it can be resolved by increasing tariffs. The price of electricity is already very high."

A proposed plan is to change the exposure faced by current investors, such as the Public Investment Corporation's R100bn, into equity.

It would improve Eskom's balance sheet, and would assist in raising more money. The party is expected to discuss that proposal with the leadership of Eskom.

Getting SOEs right

"Our view as well is that you need to break Eskom down, probably into three pieces: a company doing production, another doing transmission and then distribution.

"It is too big of an elephant that is struggling to walk (sic)."

He said other countries that had split the functions of their national energy utilities had seen great results.

Mashatile said the ANC was open to the idea of private equity investment at all viable SOEs.

"We believe [as the ANC] that if you get your SOEs right, you have a vehicle to engage more positively in the economy and push for growth," he told the room.

"We've also agreed that, because some of the SOEs are lacking capital, we will invite private equity.

ANC open to private equity investments at SOEs

"We've steered away from privatisation, so equity investments would really be minority stakes in those SOEs, rather than complete outsourcing, except if we come across a situation where we think a particular government agency has no chance to survive.

"[Then], we will sell it outright. But it's not our priority to go on outright privatisation."

In some instances, the government would have to inject capital itself, as the private sector may steer clear of some SOEs, such as South African Airways.

"So we will engage with the private sector. We are fairly open for private equity investment in our SOEs."

Mashatile said the top agenda item every Monday at ANC meetings at Luthuli House is always: "We have to get our economy right."

They will focus on sorting out energy and water security going forward.

Read more on:    eskom  |  paul mashatile

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