Should South Africa’s state power firm Eskom split? What you need to know…

PUBLISHED: Wed, 30 Jan 2019 12:41:06 GMT

JOHANNESBURG (Reuters) – The South African government will soon debate whether to split up state power firm Eskom to make it financially viable, Public Enterprises Minister Pravin Gordhan said on Tuesday.

Eskom is vital to the health of Africa’s most industrialised economy as it supplies more than 90 percent of its power, but it is drowning in debt after a decade of steep financial decline.

Experts hired by President Cyril Ramaphosa to help revive the ailing company are proposing splitting it up into three state-owned entities responsible for power generation, distribution and transmission, sources familiar with the matter told Reuters last week.

Ramaphosa is due to meet the experts this week, and Eskom’s fate will also be debated at a cabinet meeting starting on Wednesday.

“Should Eskom be unbundled into generation, transmission and distribution, as is the worldwide practice? That is a debate we are going to have soon. And it is going to go beyond a debate because we need very fast movement,” Gordhan said at a business conference outside Johannesburg.

Gordhan, who also oversees struggling state firms Denel and South African Airways, added that the government would be willing to sell stakes in state firms to private investors “once we get to a level of stability in some of these outfits”.

“The fiscus doesn’t have space for endless bailouts,” referring to the budget.

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