South Africa unveils rescue plan for ailing power company

A woman carries firewood on her head as she walks below Eskom’s electricity pylons in Soweto, South Africa. (Reuters/File)
Updated 29 October 2019

South Africa unveils rescue plan for ailing power company

  • “The restructuring of Eskom has the benefits of increasing transparency, particularly in respect of costs”

JOHANNESBURG: South Africa on Tuesday unveiled plans to fix its embattled state power utility Eskom, which has sporadically suffered rolling blackouts that plunged businesses, schools and homes into darkness.

Public Enterprises Minister Pravin Gordhan detailed a long-awaited roadmap that will see Eskom divided into three subsidiaries: Generation, transmission and distribution.

Gordhan said that the transmission unit — which conducts electricity and manages 45,000 km of power lines — would be the first to become a stand-alone entity, still owned by Eskom.

That process is expected to be completed by March 2020.

“The restructuring of Eskom has the benefits of increasing transparency, particularly in respect of costs,” Gordhan said.

Eskom, which generates around 95 percent of South Africa’s electricity, has accumulated $30 billion of debt despite receiving multiple government bailouts.

Credit ratings agencies have warned that Eskom’s debt could cause downgrades and embarrass President Cyril Ramaphosa, who was re-elected this year in part on a pledge to restore the economy.

Eskom has long struggled to produce enough power due to aging and poorly maintained coal-fired power stations combined with decades of mismanagement and alleged corruption.

South Africa was hit by a week of rolling blackouts earlier this month — a tactic known as ‘load-shedding’ — aimed at rationing electricity when demand is too strong.

Gordhan gave no details on Eskom’s financial restructuring, saying only that Finance Minister Tito Mboweni was likely to comment on its debt when he presents a mid-term budget on Wednesday.

Energy supplies had to stay ahead of business activity, Gordhan said, “so that we are not acting as a constraint on economic growth.”

South Africa’s government plans to pour 128 billion rand (around $8.8 billion) into Eskom over the next three years.

State-owned companies were at the center of corruption scandals known as “state capture,” under South Africa’s former President Jacob Zuma.

Gordhan said that continues to affect the utility in a “systematic” way as many highly-skilled professionals were squeezed out of Eskom.

A new CEO is also be announced in coming weeks to replace Phakamani Hadebe, who resigned in July citing “unimaginable demands” of the job.

The new business plan should also expose Eskom to more competition and orient it toward renewable sources of energy.

The utility will be expected to cut coal and diesel costs and negotiate lower prices from renewable energy suppliers.

Power stations are to be grouped into clusters and compete among each other to give consumers cheaper electricity.

Lebanon’s top banker linked to offshores with $100 million in assets

Updated 14 August 2020

Lebanon’s top banker linked to offshores with $100 million in assets

  • No question of criminality raised as scrutiny increases on country’s elite amid financial meltdown and Beirut explosion

DUBAI: Offshore companies linked to Lebanon’s central bank governor own assets worth nearly $100 million, a media group has said in a report, as his role in Lebanon’s economic turmoil comes under intense scrutiny.

The companies tied to Riad Salameh invested in real estate in the UK, Germany and Belgium over the past decade according to a report by a collective of European news outlets called the Organized Crime and Corruption Reporting Project (OCCRP), a nonprofit media organization, and its Lebanese partner,

The report by the Sarajevo-based OCCRP does not allege any wrongdoing by Salameh, and Reuters has not reviewed any of the documents on which the report is based.

Responding to the report, Salemeh told Reuters he had declared during a TV interview in April his net worth prior to becoming a governor in 1993 and it was $23 million.

“I have shown the supporting documents as a proof. This to eliminate doubts on the origin of my net worth and that it was prior to holding office,” he said.

He said he had previously stated that he asked professionals and trustees to manage his net worth. “The origin of my net worth is clear, this is the important matter,” he said.

Salameh, previously seen as a guarantor of financial stability in the country, has become a focus of anger for street protesters since Lebanon’s financial system collapsed earlier this year under the weight of one of the world’s biggest public debt burdens.

The report into his personal wealth comes at a sensitive time for the country, as Lebanon grapples with the aftermath of an enormous chemical explosion that devastated the capital Beirut, fueling public anger with the country’s leadership.

The OCCRP report also comes after central bank accounts seen by Reuters last month revealed that Lebanon’s central bank governor inflated the institution’s assets by over $6 billion in 2018, showing the extent of financial engineering used to help prop up the Lebanese economy.

The governor told Reuters last month that the central bank accounting was in line with policies approved by the board.

A Lebanese judge last month ordered a protective freeze on some assets held by the governor after ruling in favor of a complaint that he had allegedly undermined the financial standing of the state.

By the end of 2018, Salameh’s assets were worth more than $94 million, the report said, citing balance sheets of Luxembourg companies controlled by the governor.

Salameh said his declaration on his net worth demonstrated he was not trying to escape public scrutiny and was the proof he has “nothing to hide.”