Pretoria - South Africa has no plans to privatise logistics group Transnet and power utility Eskom to attract more investment and has no intention of splitting the companies, the minister of public enterprises said on Tuesday. Malusi Gigaba
told Reuters in an interview that infrastructure development was the responsibility of the state and would remain in government hands, but he expects the private sector to play a bigger role.
“There is no anticipated privatisation of any of the entities or even a breakup of these entities,” he said.
Private investors have repeatedly said they could help relieve Eskom and Transnet’s strained balance sheet and speed up much-needed development in power plants and rail lines which transport commodities such as coal, iron ore and manganese.
So far investors have been limited by regulatory hurdles, but Gigaba said his ministry was developing a framework for how they should be involved in the sector, although he said South Africa would proceed carefully.
“On the continent private sector participation has been dismal... we have to be cautious in moving forward,” he said.
Gigaba said state firms were on track to meet borrowing targets spelt out in the February budget, and that Transnet plans to borrow from the international market later this year.
He said electricity tariff increases by Eskom were unavoidable, despite concerns from some big industrial users that they are hurting their viability and harming the economy.
Eskom was granted three annual increases of 25% and the national energy regulator has said Eskom may apply for two additional such hikes to pay for new power plants. From 2016, tariffs are expected to rise in line with inflation.
Inflation stood at 5.3% in July.
“We would like going forward to see Eskom’s tariffs being raised at inflation-related rates. Eskom has made the commitment and we will ensure that it sticks to it,” Gigaba said.
Gigaba said he had confidence in the new leadership at both entities and said Eskom would meet fast-rising demand for power and avoid a repeat of a supply crisis which hit the economy in early 2008.
“We will keep the lights on, there is no doubt about it,” he said.