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SA considering selling IDC shares in publicly traded companies

Bloomberg reported that South Africa was looking at the possibility of selling shares in publicly traded companies to boost Eskom’s finances which are in dire need of support.

Last week, government revealed in its mid-term budget that R20 billion will be allocated to Eskom through the sales of assets which are not fundamental to the overall product of the utility. The Industrial Development Corp (IDC) holds some of these which include shares in Sasol, a global producer of fuel, produced by means of coal-fire power.

Following the announcement, Eskom’s long term rating of BBB+ was reaffirmed yesterday by credit ratings agency Fitch.

Minister of Finance, Nhlanhla Nene assured that the form of share ownership would not affect the way government would genMinister of Finance, Nhlanhla Neneerate funds. During an interview at a conference in London on Monday, he told reporters: ‘If it’s held by government, it’s held by government… There are areas where the government shouldn’t be invested. It’s those areas that we are looking at.’

Eskom has recently been shredded in the media for not being able to meet consumer demand, where 95 per cent of South African’s rely on the utility for power. A large cash injection of R225 billion is needed to ensure the utility can stay above water for the next five years.

Bloomberg reported that the IDC owns 8.2 pe rcent shares in Sasol worth a staggering R29 billion; 13 per cent of Anglo American Plc unit Kumba Iron Ore Ltd amounting to R11 billion; and 7.9 per cent share in ArcelorMittal South Africa for R1.2billion.

Rob Davies, minister of trade and industry, said in an interview at the same London conference that unlisted companies including freight firm Transnet SOC Ltd and Eskom would resume their status of being state owned.

Davies said this was essential as they are, and continue to be large contributors to the country’s infrastructure.

The selling of non-core assets had been reported in ESI in September when South Africa’s National Treasury had stepped in with a bailout package for Eskom.

Photo source: Gallo Images / Nardus Engelbrecht

Picture source: Bloomberg

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.