LATEST FINANCIAL NEWS
Business body on SONA: Wake up and smell the Eskom crisis, Mr President
Business Unity South Africa’s Cas Coovadia has called on President Cyril Ramaphosa to recognise in his upcoming State of the Nation Address that South Africa is in crisis – and that much of it can be attributed to the country’s beleaguered power utility Eskom.
Ramaphosa will deliver his address in Parliament in Cape Town at 19:00 on Thursday.
Coovadia, who is serving in an interim capacity since former BUSA CEO Tanya Cohen stepped down earlier this month, said he hoped the president would use his address to announce much-needed reforms at the debt-laden power utility, building on what he announced at his February address.
In February, Ramaphosa announced that Eskom would be split into three separate entities – generation, transmission and distribution – which would fall under Eskom Holdings.
Coovadia said it was critical for Ramaphosa to announce further movement in this development, as everything that had occurred at Eskom in the public eye since had been negative and off-putting for investment.
“President Cyril Ramaphosa needs to appoint a chief reorganisation officer for Eskom and announce a clear programme, with timeframes, to implement recommendations of his advisory panel on Eskom,” said Coovadia.
Earlier this year Finance Minister Tito Mboweni announced that a reorganisation officer would be appointed to carry out recommendations of a Presidential task team. The position has not been filled yet.
Eskom is saddled with near R500bn of debt, according to Bloomberg calculations. It isn’t selling enough power at prices to cover its interest payments and operating costs.
The presidency, meanwhile, announced on Tuesday that Ramaphosa had met with the power utility’s board for a report back on the implementation of its nine-point turnaround plan. Minister of Finance Tito Mboweni, Minister of Mineral Resources and Energy Gwede Mantashe and Minister of Public Enterprises Pravin Gordhan were also in attendance at the meeting.
In a statement, Ramaphosa’s office said he was “expected to announce further measures to support Eskom’s efforts at recovery and financial and operational sustainability” without providing further details.
The president has previously described the power utility as “too big to fail”, saying it will not be privatised. National Treasury director-general Dondo Mogajane, meanwhile, said earlier in the month that SA will need to increase its financial support for Eskom.
Coovadia said Ramaphosa needed to take hard decisions on state-owned entities that “were not strategic and have no prospect of being viable”.
Ramaphosa must be unequivocal on the importance of the South African Reserve Bank’s independence. He should assemble a team of experts from various sectors to address the country’s education crisis.
He added that, in his view, the president needed to suspend application of visa regulations that impede tourism and entry identified and needed skills, while initiating a process to change such regulations.