Eskom will become irrelevant – Remgro CEO
Remgro CEO, Jannie Durand, said that Eskom will become irrelevant in five years’ time with the private sector taking over electricity generation and distribution.
Durand spoke in an interview on 702 following the release of the company’s results for the six months ending 31 December 2022.
Durand is “firmly of the opinion that in five years’ time, Eskom will become irrelevant”. He said it is the “way to go” with state-owned enterprises and “should be done more and more”.
Durand pointed to the success and benefits of the effective privatisation of the telecoms industry in South Africa in the 1990s and 2000s.
Remgro is not sitting back and waiting for privatisation to occur. “We are steaming ahead and trying to make these things work. We are engaging with the government and hope to get some positive feedback”.
The company has launched an energy exchange which is set to start selling affordable wind and solar power to South African businesses in mid-2023.
Remgro founded the Energy Exchange of Southern Africa, known as Energy Exchange, after it realised that energy security in South Africa poses a threat to its investee companies.
Energy Exchange is a NERSA-licensed electricity trader, offering corporate customers an alternative renewable source of electricity produced by independent power generators.
Buyers will be able to rely on energy sources such as wind, solar, biomass and hydro, which matches their needs more accurately, rather than just relying on a single source.
Importantly, the electricity tariffs charged by Energy Exchange are competitive and escalate at inflation, providing a predictable and stable cost estimate for corporates.
Pieter Uys, strategic investments executive at Remgro, said they have been developing Energy Exchange over the last five years and have built a strong supply and demand pipeline.
“The platform offers the benefit of aggregation, allowing multiple customers to access scale benefits in procuring energy,” Uys said.
“In turn, large power generators can negotiate with a single centralised electricity buyer.”
Eskom being privatised
Efficient Group chief economist Dawie Roodt agrees with Durand, saying Eskom is “simply dying” and that electricity production is being privatised.
This is not privatisation as a government policy. However, the state is simply collapsing, and the private sector is merely taking over state functions.
“In the long term, electricity generation will be private. Eskom will merely distribute electricity with the utility being relegated to buying electricity from other entities and selling it on,” said Roodt.
He said Eskom is financially and operationally unsalvageable and will come to the same end as South African Airways (SAA).
He added that the best way to handle Eskom is to treat it like a private sector company and place it into business rescue.
Apart from the private sector starting to take over Eskom’s responsibility to provide stable power, the state also seems to privatise the power utility with its latest debt takeover conditions.
If the conditions attached to Eskom’s debt relief plan from the National Treasury are applied, the utility will effectively be privatised.
This is echoed by other commentators such as Kokkie Kooyman, a finance sector expert at Denker Capital, who called the ANC policy “privatisation by stealth”.