Eskom is not ready to be privatised

The impact of constrained energy supply on the economy is a major concern, but government is not ready to privatise Eskom, says public enterprises minister Lynne Brown. 

In addressing captains of industry at the Johannesburg Chamber of Commerce and Industry on Tuesday morning, the minister said that while business and government needed to work together to boost economic development, the time to decide on whether or not Eskom should be privatised had not yet arrived. 

Earlier this year, government adopted a 9-point plan to boost the economy, the minister said, but solving the economic challenges cannot be done by government alone. “South Africa’s biggest challenge is the economy has not grown fast enough and long enough.”

Addressing the audience, president of the chamber, Ernest Mahlaule, said the current economic challenges made it even more important now for government and the private sector to work together and leverage one another’s strength and resilience.  

A secure supply of energy has been a major concern for the South African economy and its future growth.  Despite Tuesday being the 112th day without load-shedding, “We are not out of the woods yet,” Brown said. “We are okay for what we have, [but] for growth we are not okay.”

Brown, however, said she had always held the view that basic services, including the likes of Eskom, should not be privatised. “We need to look at the end state of our energy mix … I can’t say if Eskom should be privatised, it depends on the end state.”

Brown said, in absence of an updated energy plan, government was not yet ready to take that decision.  In any case, “I’m not sure anyone would want to buy Eskom at this stage,” Brown added.  “I’m pleased with Eskom now. I don’t know what I’ll do next year, but today I am happy,” she said. 

However, the private sector still has an important role to play and the focus now is to get more renewables connected on the grid, the minister said. Independent power production, facilitated by the department of energy, has been heralded worldwide as a highly successful green energy generation programme

“IPP’s are quite a key vehicle in securing energy capacity from renewables,” Brown said.  Uncertainty, however, remains over whether Eskom will be able to fund the connection of an increasing number of future independent power projects to the national grid. 

Although not in her portfolio, Brown noted that a potential nuclear build would also have to provide opportunities for private sector involvement. 

Brown said she was pleased about Medupi coming online and further progress seen. “That is concentrated leadership … and time frames and report backs.”

The minister oversees six state-owned enterprises with an asset base of R908-billion and said she had warned them would not go to treasury with a begging bowl in hand. 

“There is a culture in state-owned companies [that], we can do what we want, what we need to do, because the state is going to bail us out,” Brown said. 

The minister went on to say all the entities under her had turned a profit, although some were indeed minimal.  State-owned entities have a complex role to play which is both commercial and developmental. But, “it must make profits, and how best can it make those profits?” she said. 

Brown said legislation to reform state-owned enterprises, of which there are 700, is currently under way. Brown recognised the need for active engagement on this. Meanwhile, national treasury were also developing a private sector participation paper. 

But a significant challenge is posed by a persistent trust deficit between government and the private sector, a concern raised by the audience members. 

Brown agreed the issue was of significance, noting the trust deficit stemmed from the negative narrative in the country.  “The narrative is what we all say about each other around the dinner table and in the public sphere … [and] there is no engagement about how we sort that out,” she said. 

Formal structures for engagement such as National Economic Development and Labour Council and Business Leadership South Africa meetings, are not the sort of engagements that bring about changes Brown said. 

“We have put in place so many protocols … there is not a way we can engage on something quickly … there must be a different way.”

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