Sale of government assets to fund Eskom

By Staff Writer
At the World Economic Forum in Davos, Switzerland, Finance Minister Nhlanhla Nene said that the government has identified non-strategic state assets that it will sell in order to raise R20 billion to assist Eskom in funding its R225 billion cash-flow gap. The assets that are set to be sold have not been identified as they may be market-sensitive.
 
In an interview with Bloomberg, Nene said, "We're making good progress… [The plans] are at an advanced stage, but a sensitive stage."
 
The first R10 billion cash injection is expected to be paid by about June this year. "We are looking at around June to release the first R10 billion, but that will only be done once we've received the proceeds from the disposal of state assets."
 
In recent weeks, Eskom has continually warned about the ongoing constrain on the power grid which may lead to load shedding, possibly on a continuous basis until April. Since they made the announcement there has been no blackouts, but Eskom says that the threat of load shedding is still there.
 
There is continued debate as to whether the power utility should receive a bailout from the government, as this is only a short term solution to an ongoing problem.
 
Eskom was forced to implement load shedding in December after the collapse of a coal silo at the Majuba Power Station, which reduced electricity supply by roughly 1 800 megawatts (MW). This forced Eskom to rely more heavily on its open gas turbines to supply power to the public.
 
Eskom spokesperson Andrew Etzinger has said that if Eskom does not get financial aid, there is a big risk of load shedding, as diesel supplies for the open gas turbines will run out by mid-February.
 
According to reports, Eskom will be conducting maintenance on its various units. In a press conference last week, Eskom CEO Tshediso Matona highlighted that maintenance of the various generators and power stations had not been carried out as it should have in the past.
 
He said: "Eskom is like a car that has not been maintained. Eskom has not stayed faithful to that maintenance religion for a very, long time. The reliability of our equipment is the price we are paying."
 
Another state entity that is due for a bailout is floundering South African Airways (SAA), who is set to receive a R6,5 billion guarantee from the government, on top of the R5 billion guarantee that is already in place. These are subject to SAA meeting certain requirements. For more information click here.

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