Debt-ridden power utility Eskom will sell 7,000 of its non-core properties – valued at nearly R10bn – over the next five years.
Its extensive property portfolio comprises of vacant land (with power lines running through), commercial, residential, mines and power stations nationwide.
“The properties are being sold through the National Treasury’s property disposal website on a daily basis,” says André de Ruyter, Eskom Group CE.
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Speaking to BizNews, De Ruyter says if listed, the power utility would be one of the largest property companies. However, to ensure financial sustainability, the group has identified 7,000 non-core assets to be disposed of through National Treasury.
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Eskom estimates the value of the properties to be approximately R10bn.
He explains that the sale of the properties is in line with the Public Finance Management Act. It promotes the objective of good financial management maximise service delivery through effective and efficient use of the limited resources.
Many of these properties are currently vacant and in quite a bad state.
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To this end, the power utility is currently in discussions with the Department of Human Settlements regarding its residential properties. De Ruyter says the department could use some of its properties to meet demand for housing needs.
“Some of our residential properties were built for staff during construction of Kusile and Medupi power stations.”
In addition, he says the power utility has operational assets such as its 30 power stations countrywide. Eskom also has a number of vacant office buildings such as one in Braamfontein in Johannesburg, and is up for sale.
“A building such as this one could be redeveloped into apartments, hence the discussions with the Department of Human Settlements.”
Eskom’s H1 2021 results ended September 2020 show improvement in financial and operational performance recording R28.1bn in EBITDA. Its net profit after tax reached R83m.
During this period, government’s support was R6bn, with a further R56bn commitment for the 2021 financial year.
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“The power utility’s top priority remains to address operational and financial challenges and return to financial sustainability,” says De Ruyter.
According to Eskom CFO, Calib Cassim, the focus will continue to be on improving the group’s income statement and reducing arrear debts.
He says cost savings alone will not solve the power utility’s financial position. “The price of electricity must migrate to prudent and efficient cost reflectivity while embedding the user pay principle,” he adds.
