R30bn Eskom windfall on cards
POWER STATIONS
I-NET BRIDGE
THE partial sale of Eskom's 20 electricity power stations is being considered - conservatively valued at a potential R100-billion and the crown jewel among state-owned companies.
Sivi Gounden, director-general in the Department of Public Enterprises, said on Friday government wanted to encourage maximum private sector participation while also maintaining a level of control in Eskom, as it played a developmental role.
The move has the backing of Eskom management, which has recommended bringing in a Strategic Equity Partner (SEP) in line with the process leading to the 1997 sale of 30% of Telkom to foreign investors.
Were government to go the Telkom route, it could raise about R30-billion - the largest privatisation to date, potentially making a significant dent in the state's debt burden.
Meanwhile, Eskom chief executive Allen Morgan told I-Net Bridge this week the group had set an electrification target of 600 000 new homes over the next three years on top of the 1.75-million it electrified in the six years to the end of 1999, eventually leaving an estimated 75% of homes in SA electrified .
Late last year government accepted the division of Eskom into four separate companies - Generation (power stations), Distribution, Transmission (electricity grid) and Eskom Enterprises (non-core and unregulated businesses) - and the "corporatisation" of the utility by mid-year.
Details are expected to be released by Public Enterprises in March, including the content of a shareholder compact between government and Eskom detailing the utility's tax and dividend levels.
Eskom Generation is by far the largest of Eskom's regulated operations and the only one suitable for significant privatisation, as the distribution of electricity is set to move under government control and transmission remains a "natural monopoly".
Morgan says the 20 power stations in the Eskom Generation group have a capacity of 30 000MW, operational for at least another 20 years.
The US-based Electricity Power Research Institute values 1MW of capacity at 600 000, valuing Eskom's total capacity at 18-billion (around R110-billion). Deducting the R12-billion of Eskom's total R28-billion debt accruing to Generation leaves the division with a potential value of just under R100-billion.
Gounden cautioned that any move to bring in an SEP for Eskom Generation or seek an initial public offering on the JSE "needs to be explored thoroughly but will not be ruled out". He said the listing route would allow for wider ownership of Eskom while an SEP would bring in foreign capital and expertise.
Gounden backed Eskom in its decision to retain all power stations under one corporate entity although they will operate as separate business units.
Eskom is likely to retain its monopoly over generation while it is running at overcapacity, currently estimated at between 5 000MW and 8 000MW.
On a smaller scale, government is also backing the "divestiture of non-core operations held by Eskom Enterprises", said Goundin, adding that a register of these businesses was expected in March. Eskom Enterprises was launched last year to run Eskom's unregulated business and lead Eskom's drive into the rest of Africa.
Morgan said Eskom's telecommunications division would be incorporated into Eskom Enterprises, making it a key player when the second landline telephony license is awarded in 2003.
Morgan said Eskom was in preliminary discussions with Transtel - Transnet's telecoms business - about joining their operations. Industry sources have speculated that Transtel and Eskom Telecoms could team up with international and local giants to bid for the second license once Telkom's monopoly over telephony expires. Gounden said government was exploring the synergies between Eskom Telecoms and Transtel and would resist private sector operators "approaching these companies separately".
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