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Johannesburg - South Africa is yet to appoint banks to manage state asset sales needed to fund its power utility, three people with knowledge of the matter said, bringing into question a statement by the public enterprises minister that almost R23bn will be raised within a “couple of weeks”.
While investment banks were asked to submit opinions last year about how best to recapitalise the struggling electricity producer, none have yet been told that they have won the contract to do the work, said the people, who are directly involved in the banks’ bids and asked not to be identified because the matter is confidential.
Public Enterprises Minister Lynne Brown said on Wednesday that Eskom would receive R23bn from the National Treasury “in the next couple of weeks”.
READ: Brown: Eskom board's baptism of fire - as it happened
The country faces the risk of credit rating downgrades and will have power cuts for at least two years because the utility can’t meet demand for power after failing to build new plants on time or do adequate maintenance.
The government said in September it would sell “non- strategic assets” to help plug Eskom’s R225bn funding shortfall. South Africa has explored the idea of selling its R29bn stake in Vodacom [JSE:VOD] four people with knowledge of the matter said in October.
‘Very clear’
Finance Minister Nhlanhla Nene in February “was very clear in the budget about how the money would be raised, that it would be through the sale of non-core assets,” National Treasury spokesperson Phumza Macanda said in response to e-mailed questions.
“We’ve also said the first tranche of R10bn is due by June. We are not going to comment further, given the market-sensitive nature of this.”
Public enterprises ministry spokesperson Lionel Adendorf said the ministry’s view was the same as Treasury’s.
The minimum amount of time it would take to sell the Vodacom stake would be four to six weeks, and even that would be an unusually quick transaction, one of the people said.
READ: Brown: Expect winter load shedding as Eskom ups maintenance
The timing of a deal could also be hindered by the May 18 date for the company’s full-year financial results and the prior closed period when earnings information may be known by executives without being in the public domain. A deal during that time could raise questions about insider trading, they said.
While Eskom has installed capacity of almost 42 000 MW, 29% of that has been out of service on average in the past five months because of maintenance and plant failures, data from the company show.
Demand for power in South Africa has averaged about 29 000 MW over the period.
