With Eskom having found a buyer for its R9bn finance company — a key condition of a R254bn debt-relief package from Treasury — it must now clear the hurdle of obtaining approval from the Competition Commission for the sale.
Eskom board chair Mteto Nyati told Business Times this week they had screened four bidders to buy the Eskom Finance Company (EFC) and ultimately settled on a deal with an unnamed listed company for an amount he could not disclose. “[It has been] almost 20 years we’ve been trying to sell this company. It has been very difficult to sell it,” he said.
“We started a [new disposal] process ... about a year ago, and we identified a few potential buyers. One, which is a company that is listed on the JSE, was successful, and we were able to get a value which was very in line with our expectations, or slightly better. So the board, about a month ago, approved that deal, but it has to go through the Competition Commission to make sure the company gets the necessary approval.”
The EFC primarily extends home and other loans to Eskom employees and those who work for its pension and provident fund. Its loan book comprises both fixed and variable-rate loans. However, Eskom has been trying for years to dispose of the company.
Nyati told parliament’s portfolio committee on electricity & energy that finding a buyer was the final condition attached to a R78bn debt-relief allocation that the National Treasury set aside for Eskom in the 2024 budget. “The citizens of South Africa, through National Treasury, have supported us with debt-relief and there were certain key requirements that Treasury wanted to meet... We had met all of those except for one, where we were expected to sell [the finance company],” he said.
The citizens of South Africa, through National Treasury, have supported us with debt relief and there were certain key requirements that Treasury wanted to meet... We had met all of those except for one, where we were expected to sell [the finance company]
“We're happy to say the board approved the sale about a month ago. At the right time, when the buyer of this entity has gone through their own process, they’ll be able to disclose to the public who bought them and at what price they bought the entity.”
Delivering the medium-term budget policy statement in October, finance minister Enoch Godongwana said that due to Eskom’s failure to dispose of the finance company by the end of March, the Treasury had reduced the debt-relief allocation from R78bn to R76bn in 2023/24.
He warned of a further reduction in the debt relief allocations if Eskom failed to dispose of the company by early next year. “This allocation was fully disbursed and converted to equity following Eskom’s compliance with all the attached conditions. Eskom’s allocation for 2024/25 will be reduced by R2bn to R64bn should it fail to dispose of the Eskom Finance Company by 31 March 2025.”
Much like Eskom, the EFC has struggled to table annual reports and financial statements on time to the department of electricity & energy and parliament.
This week, electricity & energy minister Kgosientsho Ramokgopa wrote to National Assembly speaker Thoko Didiza requesting another extension for the tabling of Eskom’s 2023-24 annual report and financial statements, which were due on December 6.
“Eskom is expecting to finalise the year-end audit and the annual financial statements by 30 November 2024. Following that, Eskom will follow the internal governance processes to approve the annual financial statements and related reports by the board and its committees,” Ramokgopa said.
Eskom’s 2023 annual report noted the potential impact of further delays in the sale of the EFC on the amount and timing of debt relief as this matter was a long outstanding cabinet decision arising from previous government support.
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