The restructuring of Eskom, including a substantial debt bailout and its break-up into three parts, was put to the ANC lekgotla on Saturday as the first step towards dramatic changes to save the company.
The lekgotla was briefed by a task team of experts established by President Cyril Ramaphosa to guide the government on a way forward for the company.
Eskom is deep in financial crisis and is unable to pay the interest on its R419bn debt burden out of revenue it generates. The power utility is acknowledged as the single biggest risk to the SA economy by the Treasury, credit ratings agencies and the investment community.
The task team has put forward a package of proposals, which include splitting Eskom into three state-owned companies for generation, transmission and distribution. It is also recommending a substantial bailout, as well as tariff hikes.
Eskom chairman Jabu Mabuza has put the quantum of debt relief required at R100bn. The task team has not put a number on the bailout as its size is dependent on the magnitude of tariff increases as well as the possibility of the introduction of additional financial instruments and is still being modelled. It would, however, be substantial and at the least the size of that recommended by Eskom.
Participants at the lekgotla said the proposals had received broad support with the proviso that extensive consultation takes place with all stakeholders and that privatisation is not on the table. There was broad consensus that the status quo could not prevail and interventions had to be urgently made.
The ANC has asked minister of public enterprises Pravin Gordhan and the government to consult "with all stakeholders, particularly with trade unions" in the next three weeks on these and other proposals.
The next week will be crucial for Eskom as urgent meetings take place between the Treasury and the task team ahead of the budget in February.
While the Treasury has officially stated that the funding of state-owned enterprises must not be a burden on the fiscus, insiders indicate that there is recognition that Eskom requires substantial financial support.
Business Day understands that the main recommendation is to break up Eskom. According to a number of people attending the meeting, this made sense in light of the structural problems faced by the utility.
However, it was expected that trade unions are unlikely to be keen on the proposal, and thereore thorough consultation would be required.
Approached for comment on the possible breaking up of Eskom, ANC head of economic transformation Enoch Godongwana said this was not a new debate in the ANC. An attempt was made to separate distribution a few years ago, but due to resistance from municipalities, the project collapsed. Municipalities generate a great part of their revenue by charging consumers for redistribution.
Godongwana said the lekgotla tasked the government with making quick interventions to deal with the crisis at Eskom as a matter of urgency.
National executive committee member Siyabonga Cwele told journalists that urgent and implementable steps were required to deal with the challenge of liquidity of the utility and the government was tasked with exploring viable options to "reposition Eskom".
This had to be done in a way that protected jobs. He said the ANC was also concerned about potential electricity price hikes.
Cwele said Ramaphosa would announce measures to turn Eskom around, as well as other economic interventions during the state of the nation address in February.
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