Get more Mail & Guardian
Subscribe or Login

Masondo mulls listing Eskom on the JSE as potential solution to the power utility’s debt crisis

Deputy Finance Minister David Masondo on Friday said possibly listing debt-ravaged Eskom on the JSE was an example of the kind of out-of-the-box thinking characterising the talks on the power utility’s financial problem.

Masondo repeatedly stressed during a public hearing on South Africa’s transition to a low carbon economy that he was airing ideas in his personal capacity and his views were not officially those of the treasury. He added, though, that these talks were happening to try to resolve Eskom’s debt crisis.

The transition is expected to have wide-ranging consequences, both positive and negative, including risks to social security in coal- and fossil-dependent regions such as Mpumalanga and the Vaal Triangle in Gauteng.

During the hearings, hosted by President Cyril Ramaphosa’s climate change coordinating committee, Masondo drew participants’ attention to the fact that Eskom’s just-energy transition plan did not consider the utility’s debt. 

Chief executive André De Ruyter said there were discussions on funding transition programmes through concessional finance and grants. These programmes include investing in coal plants that are decommissioned to set up alternative energy manufacturing.

A pilot project at Komati power station in Mpumalanga will serve as the test for managing the effect of decommissioning on people. De Ruyter emphasised that the concessional finance on the table was conditional and included investment in mitigating the social effects. 

Eskom is proposing that the plant be turned into a manufacturing facility for micro-grid containers needed to provide power to the 13% of people in South Africa who don’t have access to electricity. 

Public Enterprises Minister Pravin Gordhan told the hearing that Komati’s just energy transition plan was a microcosm of what was to come and “it could be SA’s example of our overall intent”.

Gordhan said that addressing Eskom’s debt and funding the just-energy transition were two different things. He reminded participants that corruption had led the utility to its financial crisis. 

He pointed out that financers wanted a clear climate policy showing the road to systematic decommissioning, ambitious carbon reducing targets and evidence that the country was moving in that direction.  

The cost of new 8 000km transmission lines for Eskom’s future grid is expected to be R120-billion. 

“Eskom is not a credible borrower,” Masondo said. “We need some involvement of the sovereign [state] to solve the Eskom legacy debt. Personally I don’t support the idea that the debt must be transferred to the sovereign — it will not solve it but simply transfer the debt.” 

Eskom announced in May that it had reduced its debt by a fifth, bringing it down to R401-billion from R484-billion 12 months earlier.

A process is underway to unbundle Eskom into three independent entities — generation, transmission and distribution — to try to make the utility viable. Eskom told parliament in May that the legal separation for transmission was to be finalised in December, while those for generation and distribution are expected to follow a year later.

De Ruyter said the “unbundling” will also remove capital constraints in generation. 

Masondo said the treasury did not yet have a position on climate-for-debt swaps, a new way creditor countries are restructuring debt owed by developing countries to offer better conditions and refinancing for climate related activities. 

“It’s important to think out of the box because this mantra that operational efficiency will deal with Eskom’s debt is misled,” Masondo said, noting that the future energy system would make electricity more affordable. 

Masondo mentioned this because international and local prices for renewable electricity have declined sharply, while a transition from coal would see a potential drop in revenue. 

De Ruyter told the hearings that the costs of renewable energy compared favourably with the costs of carbon abatement, which involves reducing emissions at existing plants thereby presenting an opportunity to extend a plant’s life.

The discussions come as the 10 August deadline approaches for legislation to allow for 100 megawatts (MW) of embedded self-generation.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Tunicia Phillips
Tunicia Phillips is an investigative, award-winning journalist who has worked in broadcast for 10 years. Her beats span across crime, court politics, mining energy and social justice. She has recently returned to print at the M&G working under the Amadela Trust to specialise in climate change and environmental reporting.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

‘The children cannot cope any more’: Suicide in Calvinia highlights...

How Covid-19 has intensified the physical and emotional burdens placed on children’s shoulders.

Capitec Bank flies high above Viceroy’s arrow

The bank took a knock after being labelled a loan shark by the short seller, but this has not stymied its growth

More top stories

Covid-19: No vaccine booster shots needed yet

Scientists agree it is important to get most of the population vaccinated before giving booster jabs

The convenient myth of an Africa spared from Covid-19

There are few, if any, studies to support Pfizer chief executive’s assertion that the global south would be more vaccine-hesitant than the north

Council wants Hawks, SIU probe into BAT’s Zimbabwe scandal

The cigarette maker has been accused of giving up to $500 000 in bribes and spying on competitors
Advertising

press releases

Loading latest Press Releases…
×