Eskom, the South Africa’s struggling power utility, will not be privatised after President Cyril Ramaphosa declared it “too big to fail”.
The president was delivering his first major post-election economic address at an investment conference in Johannesburg last week. The conference was hosted by the Goldman Sachs Group.
“We are not privatising Eskom, we are restructuring Eskom, a process that will allow the private sector to be our partners – our partners in generation (and) our partners already in distribution,” said Ramaphosa.
In March South Africa was forced to repeatedly implement Stage 4 load shedding due to a combination of unplanned plant breakdowns, low diesel reserves, scheduled maintenance and the loss of power due to damaged transmission lined from Mozambique.
“It was a perfect storm that we got into,” said Ramaphosa. He added that while some feared power cuts could negatively impact the May 8 general election, the SA Defense Force was able to head to Mozambique and restore electricity pylons damage by a tropical cyclone.
Ramaphosa said the debt that Eskom had amassed was a “problem that we have to deal with”, adding the power utility was “just too big to fail”.
“It’s just too important to fail and too overarching in the life of our country,” he said. “It holds the fortunes at an economic level and social level of our country’s life in its hands.”
Eskom has debt burden of about R419bn. In his maiden Budget speech in February Finance Minister Tito Mboweni announced a US$ 4.8bn support plan for the power utility over three years. Over a decade balance sheet support is expected to reach about US$10.4 bn.
President Ramaphosa said the S.A government has a “credible” business plan to get Eskom out of the “mess it is in”.
“The plan has been tested and evaluated. It is credible and can be implemented and it is already being implemented.” He said
“We have also got to look at the debt and address the issue of debt, which is exactly what we are doing now with Treasury [and] with our lenders because it is so important and it’s too big to fail. We are not going to allow Eskom to fail because if Eskom fails this economy fails, this country also fails, so we are not going to allow that.”
He added he would be making further announcements related to the power utility in his upcoming State of the Nation Address.