The Democratic Alliance (DA) says that the latest financial results published by Eskom, show a need for the power utility to be privatised.
Eskom reported a profit of R9.3 billion for the first six months of the financial year, down 24% from the R12.2 billion for the same period last year.
By the end of the year, the final profit for Eskom in 2014 is expected to come in at R500 million, down from R5.18 billion last year, the DA noted.
“Eskom is clearly in crisis,” said Natasha Michael, DA shadow minister of public enterprises. “We are facing constant threats of load shedding and collapsing infrastructure at Eskom. Simultaneously, Eskom’s credit rating has been downgraded to junk status, making its debt servicing costs increasingly unaffordable and unsustainable.”
The DA pointed out that Eskom’s CEO, Tshediso Matona, conceded that Eskom is so highly leveraged, that the R20 billion government buffer it received this year is already under pressure.
Government’s financial situation makes the following facts abundantly clear:
- The state cannot afford to continue bailing out Eskom,
- The state cannot afford to have economic growth constrained by Eskom’s inability to deliver an uninterrupted supply of electricity, and
- The state cannot afford another downgrade in its sovereign credit rating. Eskom is already weighing down investors’ perception of the South African governments debt and therefore we cannot allow a further deterioration of Eskom’s financial situation.
“The bottom line is that the state cannot afford to fix Eskom, and Eskom cannot afford to fix itself. The only rational, affordable and sustainable response is to investigate the role private actors could play in stabilising South Africa’s energy supply crisis,” Michael said.
“The partial privatisation of Eskom and the involvement of other independent power producers is now a mathematical inevitability. The status quo is simply no longer affordable,” the shadow minister said.
On Monday however, the ANC said it is not in favour of privatising the country’s power system, despite problems with Eskom.
“Electricity remains a public good and therefore, if you totally privatise it, it will have problems,” said ANC secretary general Gwede Mantashe.
Mantashe was speaking to reporters at the African National Congress’s headquarters at Luthuli House, in Johannesburg.
“Privatisation of electricity supply is not a panacea,” he said.
Mantashe said the ANC acknowledged there were problems at a number of state-owned companies (SOCs).
“What we are registering is that, as the ANC, we are concerned about what is happening in a number of SOCs.
“We must pay attention to that and try to address the problems that are emerging there.”
Reporting with Sapa