Energy expert Chris Yelland said the solution to Eskom’s problems is to unbundle the power utility and list the entities on the JSE to broaden public ownership.
Eskom has been deteriorating at a rapid rate, with a declining energy availability factor which prevents it from providing adequate power to keep the lights on.
The power utility is also grappling with widespread corruption and a R400 billion debt burden which is nearly impossible to service.
There are many reasons for Eskom’s problems, including government interference, poor procurement policies, sabotage, and a lack of skills.
Many people are calling for Eskom to be privatised to solve these problems, but Yelland argues it is not the best route to follow.
“The Eskom privatisation narrative is the wrong approach. Large public service state-owned enterprises should not be privatised,” he said.
“Instead, public participation in the business of Eskom, Transnet, and other SOEs should be increased by broadening the shareholder base and public ownership.”
Yelland proposes to unbundle Eskom and list the entities on the Johannesburg Stock Exchange (JSE) and other bourses.
This approach will broaden public ownership by developmental and other financial institutions, banks, pension funds, technology partners and the general public.
“Of course, the state may retain a significant shareholding too,” Yelland said.
“It would recapitalise the business, reduce debt, strengthen the balance sheets of the unbundled entities, and provide increased shareholder oversight, transparency, and accountability,” he said.
This strategy will also broaden the managerial and technical skills pool and put in place professional management.
“It will reduce costs, improve productivity and efficiency, and reduce political interference in the business of Eskom.”
Yelland’s approach is what happened with Telkom, and compared with other state-owned enterprises, it is a standout performer.
Instead of relying on bailouts for survival, Telkom has been a strong contributor to tax revenues over the last twenty years.
Yelland’s proposal is, therefore, a good way to improve and recapitalise Eskom in a way the government is familiar and comfortable with.