Energy: ‘Response’ to Eskom crisis to be announced soon

A ‘response’ to Eskom’s ‘financial and operational crisis’ is being ‘developed’, according to President Cyril Ramaphosa, who told participants in a recent World Economic Forum ‘global press conference’ that ‘a set of measures’ aimed at ‘stabilising’ the troubled power utility and ‘ensuring uninterrupted energy supply’ will be announced ‘in the next few weeks’. Interestingly, notes Pam Saxby for Legalbrief Policy Watch, World Bank country director Paul Noumba Um believes government is ‘moving in the right direction’ by ‘pursuing discussions on possible debt relief for Eskom in conjunction with plans for restructuring the utility and overhauling the architecture of the domestic power market’ (Engineering News).

The President’s recently-established ‘Eskom sustainability task team’ is reported to have delivered a briefing at last weekend’s ANC national executive committee lekgotla – among other things proposing that the utility be ‘split’ into three state-owned companies focusing on generation, transmission and distribution (Business Day). According to the post-lekgotla statement (which is still unavailable in written form), government has been given three weeks to consult stakeholders on the proposal and other recommendations – ‘particularly … trade unions’. In Noumba Um’s view, Eskom is ‘too big to fail’ and requires ‘different kinds of interventions, including efficiency improvements’. He was silent on reports that Eskom ‘wants’ National Treasury to transfer R100bn of its government-guaranteed debt to the fiscus (Business Day).

Meanwhile, the World Bank is ‘working with government’ to finalise an ‘institutional framework’ for a fund that will be used to ‘mobilise public and non-governmental resources for economic and social infrastructure projects’ (Engineering News). According to senior economist Mark Hanusch, key priorities are to ‘improve management systems for … (a) R400bn medium-term infrastructure pipeline’ and ‘find ways to facilitate the injection of private and development finance into projects with large social benefits’. This as IMF and World Bank economic growth forecasts for SA this year sit at a paltry 1.4% (recently raised from 0.8%) (IOL) and 1.3% respectively, as Legalbrief Today has already reported. In the view of Investec chief economist Annabel Bishop, SA is ‘clearly expected to remain an under performer in the region’.

Follow Pam Saxby on Twitter (@SaxbyPam)