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Nene warns Eskom a 'threat' to SA's investment strategy

Jun 28 2018 14:25
Amogelang Mbatha, Bloomberg, and Fin24

Cash-strapped power utility Eskom is "a threat" to the nation’s investment strategy, Finance Minister Nhlanhla Nene has said.

The government plans to offer incentives to lure $100bn - about R1.2trn - in investment to the country, President Cyril Ramaphosa announced in April.

The investment drive is part of an attempt to bolster economic growth, which hasn’t exceeded 2% annually since 2013. In June StatsSA announced that SA's real gross domestic product fell by 2.2% in the first quarter of 2018. 

The Goldman Sachs Group, meanwhile, said in September that Eskom - which has more than R62bn due in principal debt payments in the next five years, was the biggest single risk to the economy.

The structure of the economy is limiting the country’s growth potential, Nene told reporters in Johannesburg Thursday.

Nene, and World Economic Forum Head of Africa Elsie Kanza, were briefing the media on a round table meeting between the WEF and South Africa. The finance minister said that better regional integration among Southern African Development Community nations was critical to boost investment.

The country's power grid has been constrained in recent weeks. Protesters blockaded roads and allegedly attacked and intimidated staff after wage negotiations between Eskom and its workers broke down earlier this month.

Unions have denied intimidating staff, or sabotaging plants. 

The power utility first said it couldn’t offer any pay increase due to poor finances. It later upped its offer to 4.7% and then to 5%. Unions have rejected both these offers and negotiations are continuing. 

The interruptions forced Eskom to introduce load shedding for the first time since 2015, although Eskom has not had to introduce rotational power cuts since Sunday 16 June. 

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eskom  |  nhlanhla nene  |  sa economy  |  load shedding
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