Eskom must not privatise its assets, acting CEO Brian Molefe told a panel of energy regulators on Tuesday.<\/p>\n
\u201cI do not think it will be appropriate to sell shares in Eskom at this stage,\u201d he said.<\/p>\n
Molefe is asking the National Energy Regulator (Nersa) for a 9.58% electricity tariff increase to fund a R50bn shortfall needed to avert load shedding while they conduct much-needed maintenance on its ageing fleet.<\/p>\n
However, energy expert Chris Yelland told the panel of regulators on Tuesday that Eskom was not considering other options, such as unbundling and restructuring Eskom\u2019s generation fleet and selling its non-core assets and\/or power stations.<\/p>\n
Molefe said this would be detrimental to Eskom as it was currently in its \u201cbust\u201d cycle and was \u201churting\u201d from funding its over-capitalised new build programme of Medupi, Kusile and Ingula.<\/p>\n
\u201cBy 2019 or 2020, we should find ourselves in the upward spiral [of cash availability] again and that is when I think we will get our credit rating back,\u201d he said.<\/p>\n
\u2018People who buy will just benefit\u2019<\/strong><\/p>\n \u201cThat is why I think selling shares in Eskom will be inappropriate at this stage, because the cycle is the wrong time to sell,\u201d he said.<\/p>\n \u201cPeople who buy will just benefit from the \u2026 period in Eskom when it becomes cash flush, without having gone through the pain of investing in Kusile and Medupi, which have largely been done \u2026 and are just about to be completed.\u201d<\/p>\n \u201cWhen we get into the 2020s, we should not stop with the capital expenditure programme,\u201d he said. \u201cWe should continue with it so that we minimise the impact of the next cycle.\u201d<\/p>\n Molefe said that since the 1920s, the lifecycle of Eskom \u201chas been boom and bust and unfortunately we are now in a bust cycle that we need to get out of without causing ourselves long-term harm\u201d.<\/p>\n He said Eskom had one of the lowest tariffs in the world in the 1990s, which was a \u201ccorrect decision\u201d, but \u201cthat period is over and we are now again on a downward spiral, where we require more capacity, where we require more capital expenditure\u201d.<\/p>\n \u201cWhat we failed to do in the late 1990s and the late 1980s when we were cash flush was to think about this period of putting aside money or starting the capital expenditure programme earlier.\u201d<\/p>\n Moving out of junk<\/strong><\/p>\n Molefe said he wanted Eskom to gain its investment integrity back.<\/p>\n \u201cI don\u2019t think Eskom should be rated as junk,\u201d he said. \u201cWe will be working very hard to restore Eskom\u2019s integrity back to investment grading.<\/p>\n \u201cWe think that we will reduce the cost of borrowing over the long term and it is good for South Africa.<\/p>\n \u201cI also, incidentally, do not think that we should allow South Africa to deteriorate to junk status as sovereign and this issue of load shedding has been cited by ratings agencies, by the IMF, by the economists, as one of the things that are contributing to low economic growth.<\/p>\n \u201cIf we cannot mitigate load shedding by putting aside money for OCGTs and allow load shedding to proceed, unfortunately what will happen is that the impact on the economy will be much bigger than what we\u2019re trying to save.<\/p>\n \u201cEskom has an appropriate capital structure in our opinion for a state-owned utility,\u201d said Molefe.<\/p>\n \u201cAt the moment we have gearing of about 75%. Once the state has injected R23bn in equity and converted R60bn from loan to equity, that will reduce to about 69%. That is about appropriate.\u201d<\/p>\n Source: News24<\/a><\/p>\n Eskom asks for reduced tariff increase<\/a><\/strong><\/p>\n Eskom\u2019s shocking annual price hike since 2007<\/a><\/strong><\/p>\n Eskom\u2019s sums don\u2019t add up: energy expert<\/a><\/strong><\/p>\n Higher tariffs or power cuts \u2013 you choose: Eskom<\/a><\/strong><\/p>\nMore on Eskom<\/h3>\n