Ramaphosa: Government will not sell off 'crown jewels' of new power stations

President Cyril Ramaphosa delivers his State of the Nation address on June 20, 2019, in Cape Town. (Jeffrey Abrahams/GALLO)
President Cyril Ramaphosa delivers his State of the Nation address on June 20, 2019, in Cape Town. (Jeffrey Abrahams/GALLO)

President Cyril Ramaphosa has said that while Finance Minister Tito Mboweni's economic policy paper proposed auctioning some coal power stations to raise funds, government does not intend to sell off new power stations, describing them as Eskom's "crown jewels". 

The president was replying to questions in the National Council of Provinces on Thursday afternoon. Ramaphosa said the 77-page economic blueprint, published in August for public comment, was being considered seriously by government. It includes a proposal for debt-laden power utility Eskom to consider selling coal-fired power stations to raise R450bn, roughly the same amount as its debt. The stations would then sell electricity back to the power utility at a predefined tariff.

Ramaphosa was answering a supplementary oral question by DA NCOP delegate Makashule Gana, who asked the president if he agreed with the proposal that coal power stations be auctioned off.

"If they are going to be auctioned, please give us a way in which your leadership will make this a success?" asked Gana.

Ramaphosa, in response, said there were no plans to auction power plants. "In my book, you are not going to sell the new power stations, because they are the crown jewels of Eskom. And who will buy the old and ageing power stations? They will never find a buyer." 

He said if someone did came forward to buy the old stations, committed to keep them running and employ workers and "breathe new life into them", then this was a different proposition. 

But he added that the government was not "inherently in the business of selling power stations".

The president also talked about the planned decommissioning of old old power stations. 

"We have to decommission a couple of the power stations. You might now that some of these are over 30 years old or even closer to the end of its life and has to be closed," he said.

He said the challenge of closing stations, should government decide to do so, was complicated by socioeconomic implications, including the fact that many small towns were created through the existence of nearby coal power stations.

"In closing them, we have another challenge of dealing with the ramifications of closing the stations and approaching a just transition. You have to consider workers and communities around those power stations and give them a just transition or a way forward," said Ramaphosa.

No sale of Eskom  

Ramaphosa insisted that the possible decommissioning of coal power stations and the planned unbundling of Eskom into three entities did not mean that government was on a privatisation drive. 

"We are not selling Eskom. Eskom will be carved into three entities. One would be generation. When you look at this, it is important to note that many entities are generating electricity. But in the main, Eskom will remain the main generator of electricity and must remain state-owned.

"There is an area where distribution can make room for changes as some municipalities are already distributing electricity. The private sector is going to play a key role as we restructure this electricity behemoth that we have," Ramaphosa said.

No time for blame

In an earlier question, DA NCOP delegate Dennis Ryder asked Ramaphosa why he did not intervene to "save" Eskom and the economy in 2014, when former President Jacob Zuma appointed him to oversee the turnaround of the power utility in December 2014. 

Ramaphosa laughed at the question before responding to it. He then kicked into defence mode, saying Ryder was "hallucinating a little bit". 

"I guess one should be quite direct in answering the question, because the honorable member is hallucinating a little bit. In direct answer - I think what we have been observing at Eskom .... we have been dealing with a deep rooted problem of corruption and state capture. My own sense is if there ever was an entity of government that was totally and completely captured, it was Eskom."

"Once they set their eyes on Eskom as a target, they went in with a great deal of effectiveness."

Ramaphsoa said much of the wrongdoing was "hidden", and came to light through various commissions of inquiry. 

He concluded that Eskom was too big to fail and the task of fixing the ailing entity was too important for members to be pointing fingers.

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