South Africa Considers Selling Stake in Power Utility Eskom

South Africa will consider options to increase private-sector participation in power generation, including the potential sale of a stake in state-owned utility Eskom Holdings SOC Ltd.

Possibilities the government is looking at include private investment in the electricity producer and amending regulations so that companies can build generating capacity to meet their own needs and supply any surplus to the nation’s grid, Phumza Macanda, a spokeswoman for the National Treasury, said in an e-mailed response to questions.

“Consideration is also being given to ring-fencing and selling stakes in Eskom’s non-core businesses or power stations,” as well as in Eskom’s business as a whole, she said. It’s government’s intention that it “retains control of the company,” she said.

The government’s so-called war room on energy asked the National Treasury to make proposals to raise companies’ participation in Eskom, and initial idea included plant sales or an initial public offering of the utility’s shares, Johannesburg-based Business Day reported Wednesday, citing Director General Lungisa Fuzile.

South Africa 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 electricity after failing to build new plants on time or do adequate maintenance.

The country will sell “non-strategic assets” to help plug Eskom’s 225 billion-rand ($18.7 billion) funding shortfall, the government said in September. South Africa has explored the idea of selling its 29 billion-rand stake in mobile-phone company Vodacom Group Ltd., four people with knowledge of the matter said in October.

Eskom will receive 23 billion rand from the National Treasury “in the next couple of weeks,” Public Enterprises Minister Lynne Brown said April 15.

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