SA isolated in its refusal to restructure Eskom

[miningmx.com] – ESKOM chairman Zola Tsotsi was ambivalent when asked earlier this month if the utility would ponder fundamental structural change should the inquiry into its affairs pin-point such a fatal flaw.

“While the current scope of the inquiry would not address structure [such a finding] would prompt the board to look at that,’ said Tsotsi. “There is potential for that to happen,’ he added.

Given Eskom’s shareholder, the South African government, has long dismissed privatising parts of Eskom, there’s little likelihood of this actually happening, according to a report by Nomura International analyst, Peter Attard Montalto.

Globally, however, public owned utilities in rival emerging markets are increasingly being set free, or at least greater thought is being given to the benefits of independence from the state.

A February 26 World Bank report, commissioned by government of India, recommended handing the country’s many state-owned entities more automony. “The study … recommends freeing state utilities and regulators from political interference, increasing accountability, and enhancing competition in the sector,’ the World Bank said.

In China, Communist Party leaders are planning to issue broad guidelines this year aimed at restructuring the country’s 100,000 state-owned enterprises, according to the Wall Street Journal which based its report on interviews with government officials and advisers.

Consolidation is being planned for strategically important industries such as energy, resources and telecommunications.

“The merged entities would then be reorganised as asset-investment firms with a mandate to make sure they run more like commercial operations than arms of government,’ the publication said.

It later added, however, that consolidation of this ilk had been attempted before in China with limited success.

It’s not quite privatisation, but streamlining government-owned energy companies in Poland is also on the cards, albeit temporarily slowed while the country focuses on a revamp of its coal sector.

Poland’s prime minister, Ewa Kopacz, was quoted by Bloomberg News as saying that the consolidation of state-owned power generators would help the country attract cheaper financing especially in light of a $27bn upgrade to state-owned power facilities by 2020.