South African President Cyril Ramaphosa arrives to deliver his State of the Nation address at Parliament in Cape Town, South Africa, February 7, 2019. REUTERS/Sumaya Hisham
CAPE TOWN (Reuters) – South Africa’s struggling state power firm Eskom will be split into three separate entities and government will support its balance sheet in a new turnaround plan, President Cyril Ramaphosa said on Thursday.
Fixing the crisis at Eskom was the main talking point ahead of Ramaphosa’s annual state of the nation address as it will be key to him delivering on a pledge to revive an economy that flagged under his scandal-plagued predecessor Jacob Zuma.
Many investors and analysts have called for Eskom to be partially privatized, but significant sections of the ruling African National Congress (ANC) and powerful trade unions have said that is a red line not to be crossed.
Trying to appease all sides ahead of a parliamentary election expected in May, Ramaphosa said Eskom’s generation, transmission and distribution businesses would become separate entities under an Eskom holding company.
“Eskom is in crisis and the risks it poses to South Africa are great,” Ramaphosa said during an address in parliament attended by hundreds of lawmakers and dignitaries, and watched by an anticipated television audience of more than 1 million.
“We need to take bold decisions and decisive action. The consequences may be painful, but they will be even more devastating if we delay,” he added.
Eskom supplies more than 90 percent of South Africa’s power and employs 48,000 people.
Successive governments have avoided addressing its inefficient monopolistic structure, fearing the backlash from socialist elements in the ANC and much of the public given the likely job losses.
Reporting by Wendell Roelf; Writing by Alexander Winning; Editing by Joe Brock