Eskom crisis sparks concern for SA

Eskom. File picture
Eskom Eskom. File picture
Image: File Picture

Eskom’s balance sheet is an immediate threat to South Africa’s fiscal stability, former deputy minister Mcebisi Jonas said on Wednesday.

This is one of complexities faced by government that is often misunderstood by many, he said.

Jonas is one of the special envoys appointed by President Cyril Ramaphosa to attract investment to the country.

Speaking at the Nelson Mandela Bay Business Chamber's ninth annual general meeting, Jonas said despite the country's great strengths, the challenges are formidable.

“Moving SA into our desired growth trajectory will require profound action brutal honesty, short-term trade-offs and long-term commitment.

"Take for example Eskom," Jonas said.  "The power utility's projected loss was at least R25bn this financial year.

He said the crisis was a combination of fiscal erosion caused by state capture and the size and complexity of a vertically integrated energy utility.

"We haven't done serious institutional transformation at Eskom since 1994.

“The proposal on the table is to reconfigure it and break it down into three entities, namely: generation, transmission and distribution.

"The first part of the process is to create a separate grid company. What's complex about that is that you affect suppliers of Eskom who up until now have been smiling to the bank.

"This includes both the established and new elite who have been benefiting from the current problems and challenges faced by Eskom. However we will also have to grapple  with the labour movement.

“It’s not just an easy thing we can walk into and do, because at a technical level we might know what needs to happen, but we also have to navigate the political complexities to the framework we adopted in 1994," Jonas said.

Speaking on finance minister Tito Mboweni's measures to reduce government's wage bill by R27bn over the next three years, Jonas said this was a politically charged issue that could cause havoc if not handled properly.

During his budget speech in February, Mboweni said the measures to rein in the civil service salary bill would include offering early retirement packages to about 30,000 public servants between the ages of 55 and 59 which has been met with contestation by union reps.

"It’s a politically charged issue. You touch it and it affects all other ranges of vested interests and it could cause havoc if not handled well," Jonas said.

Speaking on land reform, Jonas said whether people liked it or not, land restitution and distribution was necessary to address the ills of the past.

"But if you mishandle the land restitution and land distribution programme and completely undermine growth imperative and productivity, you would have addressed the historical injustice and created a new historic disaster," Jonas said.

  • Meanwhile while addressing investors at a Goldman Sachs conference in Johannesburg on Wednesday, Ramaphosa said land reform and expropriation without compensation would take place in an orderly manner, with no land grabs.

He said a reworked Expropriation Bill, which still has to go before the National Assembly, would lay out which kinds of land would be included in the expropriation process.

In 2018, the constitutional review committee held 34 hearings around the country to see if South Africans were in favour of amending section 25 of the constitution to allow for expropriation of land without compensation.