Tue Oct 25 19:22:20 SAST 2016

When you're in a hole it makes sense to ask for help

The Times Editorial | 05 February, 2016 00:59

The increasing likelihood of a downgrading of the country's sovereign credit rating to sub-investment, or ''junk'', grade appears to have wrought a sea-change in the thinking of top government and ruling party figures.

ANC secretary-general Gwede Mantashe sounded like a Treasury veteran when he said recently that a recession and another downgrade had to be avoided at all costs.

These topics were the focus of an extraordinary meeting last week between Finance Minister Pravin Gordhan and the chief executives of about 60 companies.

A range of ideas was floated, including the possibility of encouraging investment by the private sector in state infrastructure projects, and the partial privatisation of energy projects such as Eskom's hugely expensive and chronically delayed Kusile and Medupi power stations.

Reports yesterday said that Gordhan had proposed to ANC and government figures that the sale to private investors of up to 49% of Eskom be considered.

Eskom CEO Brian Molefe, who has been credited with helping to turn the troubled power utility around, is said to have been opposed to the idea because such a sale right now, while Eskom is so heavily indebted, would be bad for the company.

Somewhat predictably, ANC-aligned unions have rejected outright any form of privatisation, saying a privately controlled power utility would make electricity prohibitively expensive for the poor.

Whatever one's position on Eskom, the principle of public-private partnerships should not be dismissed out of hand.

The government is desperate to raise revenue for infrastructure projects that, if properly and rapidly implemented, will help ignite the growth we so desperately need to avoid a downgrading.

We could do a lot worse than encourage private capital - and expertise - to play a role in digging the country out of its deep hole.


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