The Treasury has weighed in on the raging debate that the state-owned electricity supplier Eskom could be chopped into pieces and sold piecemeal to the private sector at the expense of electricity consumers.
This comes after a number of stakeholders raised their concerns during public submissions on the proposed Eskom Debt Relief Bill, which proposes that the government takes over R254 billion of Eskom's more than R400bn debt burden.
In his Budget Speech in February, Finance Minister Enoch Godongwana introduced the Eskom Debt Relief Bill in Parliament, which is seen as a crucial step towards addressing the financial and operational challenges faced by Eskom.
The Treasury yesterday said the Bill was a result of the government's commitment to support Eskom in dealing with its debt obligations and the associated finance costs.
Treasury’s deputy director-general of public finance, Mampho Modise, said Eskom’s situation continued to deteriorate despite fiscal support as the utility seemed to be acting with impunity and continued to pass high costs to the end users.
Modise said any financial assistance without addressing structural and governance problems, corruption and malfeasance, inefficiencies, and industry-wide issues would do very little to turn around Eskom.
“The Bill is not in contradiction with the present unbundling process that is underway at Eskom. Instead, the National Treasury continues to play an active role in the unbundling process and is assisting Eskom with the lender engagements process wherein Eskom is seeking lender consent in order to proceed with unbundling,” Modise said.
“The work being undertaken by the National Treasury to explore private sector participation in transmission investment does not imply the privatisation of the National Transmission Company SA – instead, it is aimed at unlocking funding to accelerate the much-needed investment in the transmission.”
Treasury officials said they noted the comments and inputs made during Parliament's public hearings by the various stakeholders, which included the Financial and Fiscal Commission, Parliamentary Budget Office, Minerals Council of South Africa, legal expert and an academic Ben Cronin, Nedbank, lobby group Dear South Africa, and Congress of SA Trade Unions (Cosatu).
Last month, Cosatu raised concerns about the conditions attached to it, in particular the prohibition on the power utility investing in new generation capacity.
Cosatu’s parliamentary co-ordinator, Matthew Parks, said unless Eskom was allowed to invest in new modern generation capacity, its long-term sustainability remained at risk.
However, Modise yesterday said the objective of the restrictions on the new capital expenditure investment was to strengthen Eskom’s balance sheet during the debt relief period thus enabling to become self-sufficient and not rely on further government support for its financial sustainability.
Modise said the other key objective of the conditions was to redirect Eskom to focus on the maintenance aspect of its power plants to ensure that fleet becomes reliable to improve the Energy Availability Factor (EAF) and which would assist in reducing the load shedding.
“Allowing Eskom to largely focus on investing in new generation capacity will reinforce neglect of its current fleet, potentially compromise urgent investment required in the transmission system and will require additional borrowing,” she said.
“Eskom may only implement remuneration adjustments that do not negatively affect its overall financial position and sustainability. This is not to undermine collective bargaining, does not pre-empt the wage negotiation outcomes, but ensures that Eskom is financially self-sufficient.”