Eskom to court private investors
SA’s government gives its first unequivocal signal that Eskom will enter into partnerships with private investors to fund its expansion programme.
|||Johannesburg - The government has given its first unequivocal signal that power utility Eskom will enter into partnerships with private investors to fund its expansion programme over the next few years.
Public Enterprises Minister Lynne Brown yesterday confirmed that Eskom was reaching out to private investors for possible collaboration on its third coal-fired power station.
Read: No winter power cuts, vows Eskom
Brown told journalists in Parliament that the utility needed private partners for its programmes and that the station would be built jointly with the private sector.
But Brown emphasised that the department was currently not in discussion with any private party on investment in the project.
“Will you leave Eskom alone? There is still Coal 3 and I am convinced on the public-private partnerships,” Brown said. “The issue of Coal 3 has to be processed by the Department of Energy, that will then be taken to cabinet.”
She said the private sector investment was part of its programme to ramp up growth.
Co-funding
The government’s shift on Eskom comes in the wake of Finance Minister Pravin Gordhan’s Budget speech last month where he highlighted the need for state-owned entities to seek effective co-funding arrangements.
Gordhan said the balance sheets of several entities with extensive infrastructure investment responsibilities were stretched to their limits, and that the government’s support in the form of guarantees, which totalled R467 billion or 11.5 percent of gross domestic product, was a source of pressure on the sovereign rating.
Read: SA to request proposals for nuclear power
“We need to accelerate infrastructure investment in the period ahead. So we must broaden the range and scope of our co-funding partnerships with private sector investors,” Gordhan said.
“The strength of our major state-owned companies does not lie in protecting their dominant monopoly positions, but in their capacity to partner with business investors… both domestically and across global supply chains.”
Eskom group executive for generation, Matshela Koko, said the country was following the policy of an energy mix, which included coal.
Koko said the programmes could not be effected without the involvement of the private sector.
“We have gone through Medupi and Kusile, it will be naive or arrogant of Eskom to go to Coal 3 alone. We have to share the burden with the private (sector),” Koko said.
“We will have smaller units with clean technologies,” Koko added, with regard to Coal 3.
While the government has refrained from talks of possible privatisation, it has insisted that it is open to discussing private-public partnerships on its projects with state-owned entities.
Last year Trade and Industry Minister Rob Davis told Parliament that Coal 3 was part of the government’s programme to increase energy capacity in the country. Davies was part of the economics cluster of ministers when he remarked on the project.
He said the government was going to release details on Coal 3 at a later stage. This would have been after cabinet had extensively discussed it and taken a decision on the modalities of the project.
Brown did not release the projected amounts to be spent on Coal 3. But she said private sector investment was always acceptable at government level. “The economy needed all players to get it off the ground.”
Meanwhile, Eskom chief executive Brian Molefe yesterday reiterated that nuclear was still the option for South Africa as it was cheap and clean.
Molefe said Eskom would become the owner-operator of nuclear power plants once they had been completed.
BUSINESS REPORT