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To prevent Eskom’s looming bankruptcy, partial or complete privatisation of the power utility appears to be the most logical strategic intervention.
Subsequent to the release of Eskom’s dismal financial results on Monday, when chairperson Jabu Mabuza described the power utility as being at a “tipping point” after posting a net loss of R2.3 billion in 2018, right-wing party the FF Plus suggested on Tuesday that the state-owned entity be “partly or completely” privatised.
“Seen in the light of auditors’ misgivings about whether Eskom can continue as a going concern, there is only one way to save Eskom and that is through privatisation, be it partially or completely,” said FF Plus chairperson Anton Alberts.
Alberts said the privatisation would avert Eskom’s financial problems filtering down to already strained South African consumers.
“Eskom’s irregular expenditure, which amounts to R19.6 million, is nearly as much as the amount of money that the National Treasury aims to collect with the 1% VAT increase. That is all the more reason for the government not to offer Eskom a financial bailout, but rather to allow the state-owned enterprise to seek private investors.”
During the financial results presentation on Monday Eskom chief executive Phakamani Hadebe revealed that “while the entity was generating adequate cash to meet its operational requirements it still had to borrow to service debt and for investment activities”.
The entity has already been recapitalised to the tune of R83 billion and the FF Plus has cautioned the government to “no longer use taxpayers’ money to offer this reckless state-owned enterprise any more financial help”.
“Hard lessons will be learnt if Eskom is not privatised and responsibly managed,” said Alberts.
Earlier this month another state-owned entity, South African Airways, gave a written undertaking to South African trade union Solidarity that it would immediately initiate the process of procuring a strategic partner.
The revelation meant that another cash-strapped state-owned entity was finally opening up to some form of privatisation – meaning that taxpayers no longer had to foot the bill for mismanagement and corruption within the entity.
Alberts said Eskom in its own words was admitting “that high debt levels, financing costs and low power sales seriously threaten its sustainability” therefore there was a need to no longer contribute taxpayers’ money to an entity that was on the brink of bankruptcy.
