buy robaxin 750 mg By Staff Reporter
http://alatusllc.com/video-interview-with-bob-lux-at-alatus-on-greater-msp-business/ South Africa is pushing ahead with a $2bn partial privatisation programme as it tries to raise money to support struggling state electricity utility Eskom.
Nhlanhla Nene, finance minister, said discussions about asset sales had already been taking place within the government, with the companies that could be affected and with shareholders.
“There are negotiations under way,” Mr Nene said in an interview with the Financial Times. “It’s something we would want to conclude as soon as possible.”
The sale will be the first on such a scale in South Africa since the 1990s. But any moves that could be interpreted as privatisation could face internal resistance from members of the ruling African National Congress’s tripartite alliance, which includes powerful unions and the communist party.
Mr Nene declined to give details about which companies the government is talking to but said any sales would involve what it considers to be “non-core assets”. But Pretoria has a significant portfolio of investments in listed and unlisted groups, including a 40 per cent holding in Telkom, the fixed line operator – which is unlikely to be considered non-core – and 14 per cent in Vodacom, a mobile phone operator.
It also has stakes in a range of entities through the Industrial Development Corporation, a state-owned developmental institution. These include a 8 per cent stake in Sasol, the energy company, a 13 per cent stake in Kumba Iron Ore, a unit of Anglo American, and 24 per cent stake in BHP Billiton’s aluminium smelter in Mozambique. But bankers believe that selling assets from the Industrial Development Corporation would be complicated.
The decision to sell government assets marks a significant shift in policy and comes as Eskom, the state-owned utility, faces funding gap of R225bn ($20.6bn) over the next five years. In his maiden midterm budget last month Mr Nene said the state would provide a capital injection of at least R20bn financed through the sale of non-core assets. “If you look at the Eskom matter, it’s a matter that needs to be resolved as soon as yesterday, so we are working very hard at making sure we are able to arrive at that,” he said.
South Africa is this year set to record its slowest economic growth since the global financial crisis of 2008-09. Tight electricity supply is a factor hurting the economy.
In recent days, Eskom has invoked emergency measures to force energy intensive industrial users, such as mining groups, to cut consumption by at least 10 per cent during peak times, while warning of intermittent blackouts because of technical problems that have taken out about a quarter of its generation capacity. This is in part due to Eskom’s ageing infrastructure following years of under investment, and the fact that the utility has had to put off maintenance as it has struggled to meet demand.
Eskom is not the only state-owned company in trouble. South African Airways is also struggling and over the past five years the government has kept it afloat with a cash injection of R1.55bn and R7.9bn of guarantees backing its debt. Last month, Lynne Brown, public enterprises minister, said the airline was “technically bankrupt,” adding that the government could look for a potential equity investor.
Mr Nene said the message to state entities was: “Make sure you are running viable, sustainable enterprises so that you don’t come to us.” Any future financing would have to be “deficit neutral,” he added.
In his midterm budget, Mr Nene said fiscal consolidation “can no longer be postponed.” To do otherwise “would risk exposing the country to a debt trap,” he said, in a sombre speech that was generally welcomed as South Africa seeks to stave off potential rating downgrades.
Mr Nene’s target is to narrow the budget deficit from 4.1 per cent of GDP to 2.5 per of GDP in three years, while the growth forecast for the year was downgraded to 1.4 per cent.