South Africa’s state power utility Eskom is sounding out conceivable purchasers for its home loan business, a delicate archive appeared on Wednesday, in what might be the primary real privatization bargain under President Cyril Ramaphosa.
Ramaphosa has made patching up state-possessed firms like Eskom a best need as he tries to turn around years of financial stagnation and fumble under his forerunner Jacob Zuma.
But he faces a difficult balancing act as talk of selling state assets is anathema to large sections of society including the country’s powerful trade union movement.
South Africa is exposed to Eskom via over R200 billion of state guarantees, a point ratings agencies regularly cite as a risk to its sovereign rating.
Eskom said in a document on a government tender website that it was considering selling all of Eskom Finance Company (EFC), a subsidiary that specialises in mortgage lending to employees.
EFC has a loan book worth around R8.7 billion and roughly 16,000 customers, documents on the tender website showed.
Eskom narrowly avoided a liquidity crunch early this year by securing R20 billion in short-term funding from banks but still faces an uncertain future because of weak power demand and falling profits.
In February ratings agency S&P Global downgraded Eskom further into “junk” status. Eskom’s new management said its balance sheet was not sustainable after the firm reported a sharp slide in profits in January.
The government said as far back as 2015 that it was considering 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.