Did South Africa get best possible deal in Eskom bail-out sale?

1 July 2015

The DA notes today’s announcement by National Treasury that government has sold its 13.91% stake in Vodacom to the Public Investment Corporation (PIC), a wholly state-owned entity. 

The DA is cautiously optimistic about the perceived shift in policy by National Treasury in relation to the funding of distressed state-owned entities (SOE’s), with reports today suggesting Treasury is considering ring-fencing and selling certain non-core assets owned by Eskom. 

We strongly believe the solution to the financial woes of Eskom and other SOE’s, the ANC government’s supposed champions of economic growth, lies in the strategic sale of assets and establishment of public private partnerships – rather than increasing the burden on ordinary South Africans.

However, the DA has a myriad of concerns around the nature of this particular transaction. I will today write to the Minister of Finance, Nhlanhla Nene, requesting he answer the following questions in this regard:

What was the final sale price, per share sold, and total revenue realised;

What was the nature of the "market sounding exercise" undertaken by government prior to the sale;

Who were the "numerous organisations" that presented proposals for raising the funds to be allocated to Eskom;

What other assets were identified as suitable for disposal; and

Did this “closed sale” result in the largest possible revenue amount being raised.

Considering that this sale was done purely to raise revenue, Treasury’s justification for selling these state-owned assets to a state-owned entity does not hold water. It is not clear what the so-called “added benefit of keeping the shares within the broader family of public sector-related institutions” entails. The Minister must explain what this public benefit actually is.

From its inception, this sale has been shrouded in secrecy, yet preceded with inordinate haste once the Eskom Special Appropriations Bill was bludgeoned through Parliament just days ago amid strong objections by the DA.

The Minister of Finance must assure the public and the millions of government employees whose pension funds are managed by the PIC that this transaction was sound and above board, and the PIC was not bullied or coerced into this deal.

Statement issued by Dr Malcolm Figg MP, DA Spokesperson on Appropriations, July 1 2015