INTERNATIONAL - South Africa’s Treasury wants to forge ahead with long-stalled plans to sell state assets to shore up the nation’s shaky finances despite opposition from other government departments and labor unions.
The medium-term budget policy statement painted a picture of an economy in deep trouble, with gross domestic product expansion to average just 1.5% over the next three years while debt and deficit levels are set to soar. The deterioration can largely be attributed to a meltdown at state power utility Eskom Holdings SOC Ltd., which is draining government coffers and relies on bailouts to remain solvent.
A policy paper published by the Treasury in August suggested the sale of some of Eskom’s coal-fired plants could raise 450 billion rand ($30 billion), which equates to its entire debt. But a revised draft published Wednesday made no mention of the issue. That doesn’t mean asset sales are off the table, according to Dondo Mogajane, the Treasury’s director-general.
“I’m selling,” he said in an interview in Cape Town on Wednesday. “We are pushing it; if it’s non-core and if it can be gotten rid of, sell the damn thing.”
President Cyril Ramaphosa told parliament last month the government is not inherently in the business of selling power stations. Eskom’s new plants are its “crown jewels” and should be retained, while the old ones were unlikely to find buyers, he said.
But Mogajane said he had been approached by investors who were interested in the facilities and he was certain there were others who would be if they were given electricity off-take agreements.
“If it’s efficient and it’s affordable and it makes business sense, let’s go for it, irrespective of who owns it,” he said.
Union Resistance
The National Union of Mineworkers, which has about 15,000 members at Eskom, said plant sales and plans to split the utility into three operating units would result in job losses and should be halted immediately.
“If these demands are not met, we will shut down electricity generation, transmission, and distribution as such plunging the country into darkness,” it said in an emailed statement on Wednesday. “It is not a threat but a promise.”
Finance Minister Tito Mboweni also spoke out in favor of privatization on Wednesday, saying the government should consider selling airline SA Express as a case study.
The government has allocated Eskom 138 billion rand over the next three years to help it service its debt and cover its operating costs. Mboweni said the support had diverted funds from other programs and hard choices would have to be made to prevent the nation from falling into a debt trap.
While the government has been talking about selling non-core assets for years, Mboweni will make some concrete announcements in February, according to Public Enterprises Minister Pravin Gordhan, who oversees Eskom.