Johannesburg - South Africa is considering selling some of the state-owned power utility Eskom's stations or an initial public offering of a portion of the cash-strapped utility's shares, the Business Day newspaper said on Wednesday, quoting a Treasury official.
The proposal could revive previous plans to raise funds for the struggling power producer, which is battling the worst power supply shortages since 2008 and faces a funding crunch as it races to bring new power plants online.
“The question as to whether portions of state-owned enterprises can be spun off to raise money is on the table. It is decidedly on the table,” Treasury Director-General Lungisa Fuzile told Business Day.
“The Treasury has been asked by a committee of Cabinet to look into how this could be done and whether, in the case of Eskom, it would be more feasible to do it in relation to power stations or the entirety of the balance sheet of the entity.”
Fuzile said the government had revived a discarded policy of the late 1990s, which stipulated the private sector could take a stake of up to 30 percent in Eskom's power-generating assets.
Treasury officials told Reuters they would issue a statement on Fuzile's comments later in the day.
Eskom spokesman Khulu Phasiwe said on Wednesday the government was looking at a number of funding options, including selling some of the utility's assets.
“It could include some of the buildings. Maybe at some point it could be power stations,” Phasiwe told Reuters.
Suspended Eskom CEO Tshediso Matona said in March the power firm may sell assets to raise capital.
Left-leaning elements of the ruling African National Congress and unions have been opposed to privatisation of Eskom, arguing it would lead to job losses and undermine efforts to expand grid access to more black South Africans.
Eskom's funding gap to 2018 is estimated at R200 billion ($17 billion) and the utility expects to receive a R23 billion cash injection from the government this year.
The utility has applied to the energy regulator to hike electricity prices to 25.3 percent from July this year. Its spokesman said this could earn Eskom nearly R40 billion if approved.
The energy regulator said on Wednesday it would hold public consultations on Eskom's application and a decision will be made by the end of June, with any price increases likely to come into effect by September.
Reuters