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(Bloomberg) – South African President Cyril Ramaphosa said his government will discuss its plans to rescue embattled power utility Eskom SOC Holdings Ltd. with labour unions after the country was hit by five straight days of rolling blackouts, and reassured them that the utility would not be privatised.
“We accept as government that we have not done enough to bring our key stakeholders like labour on board,” when it comes to fixing Eskom, Ramaphosa told lawmakers in Cape Town on Thursday. “We are going to have a rather deep conversation with them about Eskom.”
Eskom has amassed R419bn ($29.6bn) of debt following years of mismanagement, expects to report a loss of about R20bn for the year through March and isn’t generating enough cash to cover its interest payments and operational costs. The latest power outages came after seven of the utility’s units unexpectedly tripped, a likely consequence of maintenance cut-backs.
The energy crunch, which has shuttered businesses and caused traffic snarl-ups, comes at a terrible time for Ramaphosa and the ruling African National Congress, which are gearing up for elections in May and are under pressure to revive a flagging economy and tackle a 27% unemployment rate.
Ramaphosa, who succeeded Jacob Zuma as president a year ago, last week announced that Eskom would be split into generation, transmission and distribution units under a state holding company – a plan opposed by the labour unions, which fear that it will lead to privatisation and jobs losses.
“Restructuring is not a path to privatisation,” said Ramaphosa, who described the outages as a hugely damaging reality check. “The reference to cost cutting must be understood not to mean retrenchments.”
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.