By Ed Stoddard and Zandi Shabalala
JOHANNESBURG (Reuters) – South Africa’s cash-strapped power utility Eskom may sell some of its assets to raise capital as it scrambles to light up Africa’s most advanced economy, the company’s chief executive said on Thursday.
Eskom, which provides virtually all of South Africa’s power, faces a funding crunch as it races to bring new power plants online to stave off an electricity crisis.
“We have serious financial constraints and extraordinary decisions are required,” Tshediso Matona told the Reuters Africa Investment Summit.
“And we are doing that work right now to unlock cash from our balance sheet … We are looking at what we can do with our assets such as our property portfolio,” he said.
Aside from properties and a fleet of cars, Matona also mentioned the Eskom Finance Company, which is a home loan book for employees at the state-owned firm.
“We can sell that book to the private sector or find some others ways to use that book to unlock cash. All of these things are on the table,” he said, while also stressing that no decision on asset sales had been made.
“The government says don’t just look at us, see what you can do for yourselves,” he said.
The government has said it aimed to sell “non-core” assets to shore up Eskom but this was the first time the utility has signalled it might do so on its own.
Eskom’s funding gap to 2018 is estimated at 200 billion rand ($17 billion) and it is getting a 23 billion rand cash injection from the government this year.
Weary South Africans are subjected to frequent controlled power cuts which Eskom implements to prevent the grid from being overwhelmed. The government has said its economic growth forecast for 2015 could halve to 1 percent from 2 percent because of power constraints.
One crucial way to keep things going is the use of diesel in turbines, which crank out 2,000 megawatts, 5-6 percent of Eskom’s capacity.
The cost is prohibitive though lower crude prices have helped and Matona said Eskom has secured sufficient diesel till the end of March, when its financial year ends, and was confident it would able to buy enough next year.
Eskom was also working on switching to cheaper gas from diesel, with possible imports from neighbouring Mozambique, but this would not happen on any scale for at least another year.
($1 = 11.7580 rand)
