The Ministry of Finance of South Africa is considering selling some of the coal-fired power plants operated by the state-owned power utility Eskom, possibly through an auction process. The sale of coal-fired power plants, related power plant-specific obligations and associated power purchase agreements (PPAs) could raise up to ZAR 450bn (US$30bn), assuming cost-reflective tariffs. The policy paper considering this divestment will be available for comments until 15 September 2019.
Eskom accounts for 90% of South Africa's power generation but is facing declining electricity sales and soaring debt-service costs, as its debt reaches ZAR 440bn (US$29bn). Earlier in 2019, some of the group's coal-fired power plants suffered failure, leading to massive blackouts, while its newbuild programme lags years behind of schedule and tens of billions of rand over budget. The company has just synchronised the last remaining unit (800 MW Medupi-1) of its 4.8 GW Medupi power plant, which should be fully operational within 9 months. The government is also considering splitting the company into different units for power generation, distribution and transmission, to make it more efficient.