By Lehlohonolo Lehana.
Public Enterprises Minister Pravin Gordhan has underlined the importance of Eskom and Transnet for economic growth and said reform of state-owned enterprises was imperative.
Delivering his Budget Vote to members of parliament, Gordhan said the National Transmission Company of South Africa (NTC) would be fully operationalised by November.
The long-awaited separation of the NTC from Eskom’s generation and distribution divisions has been prioritised in light of the importance of such an entity in levelling the playing field between Eskom generation and independent power producers, even though it will initially remain a subsidiary of Eskom Holdings.
Progress has been stilted, and the November timeframe is a few months behind the mid-2023 aspiration outlined in April when an application was made to the National Energy Regulator of South Africa (NERSA) for Eskom’s national transmission, trading and import and export licences to be transferred to the NTC.
Gordhan also announced that the distribution subsidiary would be “corporatised” by the end of December, while a due diligence for the establishment of a generation company and a new holding company would be completed by the end of March.
He said that similarly far-reaching restructuring was under way at Freight logistics group Transnet and that a roadmap for the future of Transnet should be completed in the next three months.
An optimisation of the implementation of private partnerships, both in rail and ports, [and] the overhaul of the freight rail infrastructure to recapture freight volumes are part of the objectives that Transnet is working towards.”
Gordhan was frank about the failings at Eskom and state logistics company Transnet, which impose binding constraints on the economy. However, he said that over the next five years, Eskom and Transnet would spend more than R300 billion to boost performance. He also pledged that Transnet Freight Rail would increase volumes on all of its commodity export lines.
He said Eskom was expected to spend R152 billion on generation projects and R74 billion on transmission. The bulk of Transnet’s R122 billion capital spend over the next five years would be spent on rail infrastructure and railing stock (R84 billion) and a significant amount on ports infrastructure (R13 billion).
A key constraint faced by Transnet has been the impasse with China’s CRRC, which withdrew the supply of locomotive spare parts to Transnet following legal action against it by the SA Revenue Services and the SA Reserve Bank over the locomotives contracts, which saw massive kickbacks paid to the Guptas.
Gordhan, who visited China earlier this month to find a solution, did not provide any information on what the trip had achieved, saying only it remained a “work in progress”.