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IDC rules out asset sale to rescue Eskom

Jan 15 2015 09:51
Reuters and Bloomberg

Johannesburg - The  Industrial Development Corporation (IDC) said it would not consider selling its holdings in listed companies in order to take pressure off cash-strapped power utility Eskom, its chief executive told local media.

The government has said it would dispose of "non-strategic" assets to raise much-needed money to help finance the ailing power utility Eskom and help end frequent electricity outages.

Speaking to the Business Day newspaper, Geoffrey Qhena said the complete disposal of IDC stakes, which amount to about R46bn, is "out of the picture" as the company is self-funding and would require the holdings to remain financially independent.

“We’ve got a specific mandate and selling assets would not help us fulfil it,” spokesperson Mandla Mpangase said by phone, confirming Qhena's comments. “We have not been approached by government to sell any assets.”

Selling IDC assets would have “a negative bearing on our funding activities,” Mpangase said. “We have our own initiatives to help Eskom, such as our R1bn investment in building solar power.”

A Barclay's note this week said the sale of the private assets held by the IDC is the fastest and most likely way to provide funds to state-owned Eskom.

South Africa is currently facing its worst power crisis since 2008, as Eskom struggles to keep the lights on due to ageing and poorly maintained power stations.

The utility last Friday implemented rolling blackouts in some parts of the country, the first such power cuts this year, and has warned that more are certain as the company has no funds to purchase fuel for its gas turbine stations.

The government will provide the utility with R20bn through the sale of non-strategic assets, it said in its October 22 mid-term budget.

Finance Minister Nhlanhla Nene said later that month that disposals could include stakes in publicly traded companies, either directly owned by the government or held by the IDC. The development company has holdings in Sasol, the world’s biggest maker of motor fuel from coal, Kumba Iron Ore and papermaker Sappi, among others.

The government is exploring a sale of its R27bn stake in mobile phone company Vodacom, people with knowledge of the matter said last year. The state also owns about 40% of landline phone monopoly Telkom.

Even with a R20bn cash injection from the government and permission to raise electricity tariffs, Eskom has said it needs more funds to ensure liquidity.

IDC has stakes in companies such as Kumba Iron Ore, Sasol, BHP Billiton, Hulamin and Sappi.

idc  |  eskom  |  load shedding  |  electricity


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