South Africa

Eskom looks to sell its R9 billion mortgage business

South Africa’s indebted power utility Eskom restarted the sale of its mortgage unit, one of many measures the utility is taking to stabilize its finances.

Eskom “commenced with a process” to sell Eskom Finance Co., which has a R9 billion loan book, by inviting prospective bidders, the company said in a response to emailed questions on Thursday.

Like other state-owned companies in South Africa, Eskom offered home loans to its staff. The unit, established over 30 years ago, typically deducts repayments from employees’ monthly salaries.

In recent years, Eskom has outlined various measures to improve its finances and address a R396 billion debt pile that it relies on the government to service.

In some cases, progress has been slow. Eskom first sought bids for the mortgage business in 2018 in a pre-qualification process.

“Eskom ran a successful process in 2020,” the utility said. “However, with the impact of Covid-19 on the economy, the value proposition did not meet all stakeholder expectations,” adding that those expectations “are aligned” for the current process.

The National Treasury is finalizing a plan to take a portion of Eskom’s debt, which is expected to be announced at the mid-term budget in October.

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