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Eskom sees privatisation light
PUBLIC UTILITIES
ESKOM has conceded for the first time that privatisation is an option for its future structure. "It is not for me to say whether or not Eskom should be privatised. That decision that rests with government. But there is a certain inevitability about it," chairman Reuel Khoza said this week when questioned about Eskom's potential privatisation. The privatisation of Eskom is likely to be one the most controversial in the light of its enormous social obligations under the electrification drive. The utility is on track to meet its RDP commitment of electrifying 1.75-million homes by 2 000. Since the drive began in 1994, it has electrified 1.148-million homes. Over the five years of the programme, Eskom has increased its customer base by a figure of 30%. Public hearings are scheduled later this month on whether Eskom should pay taxes and dividends, as proposed in the Eskom Amendment Bill. Eskom has accepted that it will have to pay taxes and dividends in 1999. The restructuring of the industry is also likely to have taken place by then. These taxes and dividends will be used in accordance with government's priorities, possibly for an electrification fund. The recommendations are contained in the Electricity Restructuring Interdepartmental Committee which, among others, recommended that the entire electricity industry move towards cost-reflective tariffs, with separate transparent taxes to fund electrification and other government local services. The committee also wants the distribution industry to be consolidated from its current 460 (mainly municipalities) into a limited number of commercially viable regional distributors. Khoza says the stalled discussions about restructuring the Electricity Supply Industry received a boost in 1997 and should be completed by the end of the year. Eskom posted a 4.8% jump in revenue to R20-billion in 1997, while net income was virtually unchanged, at R3.08-billion. The balance sheet is looking stronger with the debt to equity ratio reduced to 1.08. Eskom says the level is expected to reach parity this year. Critically, it has managed to bring down non-payment levels, which cost it more than R1-billion over the past few years. Eskom says it now collects about 90% of its revenue from problem accounts, compared with 39% in 1995. This is due to an agreement offered to municipalities under which bulk arrears were written off if current accounts were paid in full. Its most critical challenge in the next few years will be squaring up to competition as the deregulation of the industry takes place, but Khoza is confident Eskom will meet the challenge. Khoza sees an increased role for Eskom in Africa, in line with Thabo Mbeki's vision of an African Renaissance. "Eskom will also have a role in spearheading development on the continent. As one of the world's largest power supply companies, and arguably the most efficient, Eskom is particularly well-placed to provide developmental infrastructure. This will help change both the reality and the perceptions of Africa's circumstances." Khoza says Eskom has been invited by the Democratic Republic of Congo to co-operate on the development of hydropower in that country. Other invitations have been received from Nigeria, Rwanda, Uganda and Tanzania to offer advice in the development of electricity generating capacity.
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