Eskom may be split up

Johannesburg - Eskom is planning a major restructuring, which could involve a partial privatisation and a major shake-up of its labour force.

In the latest edition of Finweek, Sikonathi Mantshantsha reports that Eskom has asked international mergers and acquisitions teams of financial giants JPMorgan and Goldman Sachs to advise it on a proposed restructuring.

Finweek has been informed that the company may be split up and certain of its assets privatised, in a similar fashion to that of arms utility Denel. The first business unit apparently on the line is distribution.

Up to half of its labour force may be sold off to new owners as part of the partial privatisation and jobs may be on the line.

The restructuring idea is the brainchild of Eskom's newest executives, human resources director Bhabhalazi Bulunga and finance director Paul O'Flaherty. They respectively joined the company from SA Airways and a construction company based in Dubai.

O'Flaherty confirmed to Finweek that Eskom was considering a restructuring.

"Organisations such as Eskom need internal efficiency and productivity. We need to show we can also produce something ourselves - some savings - and not only rely on external funders," he told the magazine.

The plan is to produce some internal savings while the public utility scours the markets to produce the R45bn funding gap in its capital investment programme.

Over the next six months Eskom will produce a plan that seeks to reduce overheads to make it a "lean and mean" operation, O'Flaherty said.

Bulunga was head of SAA's HR team which reduced the national carrier's staff complement by around 20% in 2008 - credited by the current management as having laid the foundation for its R398m profit last year.

Eskom approached Bulunga to fill one of three key senior positions that had been vacant for more than a year in its executive committee.

While the World Bank recently approved a R28bn loan for Eskom, the utility is under pressure after a R9bn loss last year.

- Fin24.com