HomeIndustry SectorsFinance and PolicyEskom will not be privatised

Eskom will not be privatised

South African
minister of public
enterprises Malusi
Pretoria, South Africa — ESI-AFRICA.COM — 07 September 2011 – The South African government has no plans to privatise national power utility Eskom Holdings and logistics group Transnet in order to attract more investment, and has no intention of splitting the companies.

Confirming this here, minister of public enterprises Malusi Gigaba told Reuters in an interview that infrastructure development was the responsibility of the state and would remain in government hands, but said he did expect the private sector to play a bigger role.

“There is no anticipated privatisation of any of the entities, or even a break-up of these entities," he stated.

Private investors have repeatedly said they could help relieve Eskom and Transnet’s strained balance sheets and speed up much needed development in power plants and rail lines which transport commodities such as coal, iron ore and manganese.

So far investors have been limited by regulatory hurdles, but Gigaba said his ministry was developing a framework for how they should be involved in the sector, although he added that South Africa would proceed carefully.

“On the continent private sector participation has been dismal “’ we have to be cautious in moving forward,” he said.

Gigaba said state firms were on track to meet borrowing targets spelt out in the February budget, and that Transnet planned to borrow from the international market later this year.

He went on to say that increases in electricity tariffs by Eskom were unavoidable, despite concerns from some big industrial users that they were hurting their viability and harming the economy.

Eskom was granted three annual increases of 25% and the national energy regulator has said that Eskom could apply for two additional such hikes to pay for new power plants. From 2016, tariffs are expected to rise in line with inflation, which stood at 5.3% in July.

“We would like going forward to see Eskom’s tariffs being raised at inflation related rates. Eskom has made the commitment and we will ensure that it sticks to it,” Gigaba said.

He added that he had confidence in the new leadership at both entities, and said Eskom would meet fast-rising demand for power and avoid a repeat of a supply crisis which hit the economy in early 2008.

“We will keep the lights on, there is no doubt about it,” he assured.