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Members of Parliament debated the privatization of Eskom on Thursday. Photo: Getty Images
- Public Enterprises Minister Pravin Gordhan says the government’s agenda is not to privatize Eskom.
- During a debate in Parliament, Gordhan stressed that the transformation of the energy company will echo throughout the energy sector.
- The future Eskom will remain state-owned, but there will be room for private sector players within the energy sector.
The government does not intend to privatize the Eskom power company, Public Enterprise Minister Pravin Gordhan said.
The minister addressed a debate on the privatization of Eskom during a mini plenary session of the National Assembly on Thursday.
“There is much work to be done to reposition and revitalize Eskom after the tragic damage that state capture has caused,” he said. “Let me make it clear, up front: Eskom is not being privatized,” he told members of Parliament.
Gordhan said there are “no secrets” on the government’s agenda when it comes to Eskom. However, the participation of the private sector in the energy space is part of the government’s agenda, he explained. He used an example of rooftop solar systems installed by homes as a form of private sector involvement. In particular, poorer households can install solar panel roofs in order to electrify their homes and then sell excess energy to Eskom so that they too can earn an income.
The minister said that ensuring energy security is vital for the well-being of the country, and that it must happen in the context of commitments against climate change, such as reducing carbon emissions. For this reason, there must be “a proper balance” between renewable energy and energy based on fossil fuels. In addition, there must be a just transition for workers and communities affected by changes in energy production.
The government’s agenda involves securing additional power from both Eskom and private actors; however, the energy production capacity of the latter cannot eclipse that of Eskom, he said. Ensuring the necessary legislative and regulatory reform to support change and restructure power plants and systems to meet climate change requirements is also a government priority.
“Given its systemic nature, Eskom’s transformation will accelerate reform in the energy sector more broadly,” Gordhan said.
Lost cargo ‘regrettable’
Gordhan admitted that the recent cargo drop was regrettable. But the government has contacted the board and has been assured that steps are being taken to ensure that the necessary repairs are made. “We fully accept that the current performance of the plant is unacceptable for South Africa,” he said.
Gordhan said that in addition to ensuring greater generation capacity, such as leveraging resources such as wind and solar energy, the government is also working to ensure the entity’s financial stability and that investments generate returns, particularly the two main power plants. Medupi and Kusile.
He added that Eskom’s restructuring into three entities – generation, transmission and distribution – will result in an electrical system that SA can be proud of. “There is abundant evidence that there is a clear program ahead to solve the problem of spare power capacity, to ensure that Eskom’s balance sheet is repaired …” he said.
Some key issues that need to be addressed include having rates that reflect costs and dealing with municipal debt. An “active partnership model” is underway between Eskom and four municipalities to ensure that the debt is collected over a period of time, he said.
Opposition weighs on privatization
During the debate, DA deputy Ghaleb Cachalia, however, stated that privatization or rather “popular capitalism” is necessary in the energy sector. He called for broader ownership of shares, the reduction of the power of the unions, and the prevention of groups from acquiring a “state apparatus” to create a “preferential economic base for themselves.” He suggested that if Eskom is privatized, its social value would be higher than if it remains state-owned. “The time for discussion is now, instead of moving from one blackout to another, from one debt crisis to another,” he added.
IFP MP Elphas Buthelezi noted that millions of South Africans were left without power due to load shedding while a debate on the privatization of Eskom is underway. “Can we afford not to privatize Eskom? Isn’t Eskom itself the biggest threat to our energy security?” I ask.
“One day of burden reduction in a developing economy is too much,” he added.
EFF MP Omphile Moatwe said that the DA and the ANC were no different and that the ruling party intended to privatize Eskom by forcing it to collapse. Moatwe suggested that terms like “unbundling” or “separation” were a ruse for privatization.
