'Let's rule that one out,' says David Mabuza on privatisation of Eskom

Deputy president David Mabuza on Thursday said the government’s policy options and position have not reached a point where privatisation is seen as the answer to Eskom’s problems.

“Our current choice is to make Eskom a more efficient and effective energy generation and transmission public entity with all the necessary capabilities to ensure the security and consistency of energy supply,” said Mabuza.

Speaking during a question-and-answer session at the National Assembly, Mabuza said it would be inaccurate to characterise the current organisational transformation processes at Eskom as a move towards privatisation.

“That is not the case. Instead, the utility is at an advanced stage of unbundling, which will result in the transformation of the electricity sector to achieve long-term energy security for our country.”

Given the ongoing challenges of load-shedding, Mabuza said he understood why parliament demanded answers on the management of Eskom.

“We have stated previously that, in the main, unanticipated breakdowns of our ageing fleet of power plants contribute to load-shedding. Needless to say, we are focusing on improving maintenance and repairs to ensure increased energy availability.”

He said the issues of plant performance and maintenance have nothing to do with privatisation or public ownership of the utility.

“The unbundling or legal separation of Eskom into three subsidiary businesses, namely generation, transmission and distribution, is designed to enable Eskom management to focus, improve efficiency, create greater transparency around performance, and provide greater protection against corruption and rent-seeking.”

He said to realise the potential of an independent transmission system and market operator, the primary purpose of unbundling is to separate the generation and transmission of electricity.

“Given this information, the creation of a new transmission entity is the most important step in Eskom's unbundling process.”

He explained that Eskom Holdings will have complete ownership of the new transmission entity when it is established.

“Its primary responsibilities will include acting as an independent broker in the electricity market, fostering capital investment within the industry, and catalysing energy efficiency and cost sustainability.

“It is to be envisaged that the transmission entity will have electricity supply agreements directly with consumers, including Eskom distribution, municipalities, the SA power pool and large power users.”

He said the utility is on track to split its generation and distribution businesses by the end of 2022, as outlined by President Cyril Ramaphosa in the national energy plan.

This, he said, will also fulfil the needs of the national energy plan to drive the economy, stimulate re-industrialisation efforts and ensure security of electricity supply to households.

“Therefore, privatising Eskom is not the answer. What we should continue to focus on is getting Eskom back to its optimal performance, by ensuring the entity has sound governance structures in place, and that the required skills levels are met at the power plant level.”

Mabuza assured MPs that privatisation of Eskom is not on the cards — “so let's rule that one out”. 

He added that brining Kusile and Medupi power stations online would ease the country's problems. “I am happy that we are on course to bring Medupi into operation, and Kusile will follow.” 

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