Thursday 12, April 2018 by Jessica Combes

South African power utility Eskom considers sale of mortgage business

 

South Africa’s state power utility Eskom is sounding out possible buyers for its mortgage business, a tender document showed on Wednesday, in what would be the first major privatisation deal under President Cyril Ramaphosa, according to Reuters.

In an attempt to reverse years of economic stagnation and mismanagement under his predecessor Jacob Zuma, Ramaphosa has prioritised overhauling state-owned firms. Management of power company Eskom has long been a source of contention, with the country being exposed to Eskom via over ZAR200 billion ($16.7 billion) of state guarantees, a point that ratings agencies regularly cite as a risk to its sovereign rating.

In February ratings agency S&P Global downgraded Eskom further into “junk” status.

Eskom is considering selling Eskom Finance Company (EFC), the subsidiary specialising in mortgage lending to its employees, in its entirety. EFC has a loan book worth around ZAR8.7 billion ($721 million) and roughly 16,000 customers, according to documents on the tender website.

Since 2015 the government has mooted divesting some Eskom assets, but the proposal was vehemently opposed by unions like COSATU, on which Ramaphosa relies for support. Eskom spokesman Khulu Phasiwe said the utility would hold talks with unions about the plans to sell EFC, Reuters reported.

  

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