Eskom should toe the line, Gigaba says
FINANCE Minister Malusi Gigaba yesterday moved to reassure investors of government’s commitment to the renewable energy programme, saying Eskom should not deal with its “corporate issues” in a manner that undermines government policy.
Speaking ahead of his trip to the US, Gigaba weighed into the ongoing saga between Eskom and the renewable energy industry over power purchase agreements that Eskom is supposed to sign with 37 independent power producers (IPPs).
Gigaba said the government’s policy on IPPs remained unchanged. “In view of some statements by executive directors at Eskom we have had the cabinet say we remain committed to renewable energy and renewable energy targets outlined in the Integrated Resource Plan 2010,” he said.
Gigaba said he was meant to meet his energy counterpart Mmamoloko Kubayi on Tuesday to discuss the IPP programme. “We intend meeting with the Minister of Public Enterprises (Lynne Brown), because you cannot have a single entity of government making pronouncements that undermine the policy decisions of the shareholder.
“Insofar as the shareholder is concerned, there is no regulatory uncertainty, we are clear as to our commitment to the renewable energy mix and the renewable energy programme. The mistake that Eskom would make is to deal with corporate issues in a manner that undermines policy decision of the government,” he said.
Uncertainty The renewable energy industry estimates that the outstanding agreements represented nearly R58 billion worth of investments.
But the stand-off with Eskom has heightened uncertainty about the renewable energy independent power producer procurement programme.
Gigaba said Eskom should follow proper government channels to raise concerns about the power purchase agreements and their effect on Eskom’s balance sheet.
“There is no single entity of government that can make policy pronouncements on behalf of the cabinet,” he said.
Gigaba said during his trip to the US, he would meet representatives of Moody’s Investors Service, “to give assurance in terms of the policy direction of the government.” While its counterparts, S&P Global Ratings and Fitch Ratings recently downgraded South Africa’s sovereign credit rating to sub-investment grade, Moody’s is yet to pull the trigger. But it earlier this month placed South Africa’s sovereign credit rating on review for downgrade.
“We need to engage with them… to have a face-to-face discussion with them,” he said. He said South Africa had no guarantee that Moody’s would not follow the other agencies and downgrade South Africa.
Gigaba was confident that the South African economy was resilient and robust enough for the country to “climb back” to investment grade. He would also interact with some of the investors.
Since he took over from Pravin Gordhan, Gigaba has been under the glare of scrutiny for signs that, on his watch, National Treasury would be at the forefront of changes in government policy.
Gigaba was scheduled to travel last night to the World Bank Group and International Monetary Fund spring meetings in Washington. “The purpose of the meetings is to discuss global economic trends, the global economic outlook and provides us with an opportunity to interact with the various finance ministers from other countries,” he said.
Meeting Gigaba will have a brief meeting with German Finance Minister Wolfgang Schäuble. Germany chairs G20, which had a specific programme focusing on investment in Africa.
Gigaba said labour and business representatives would not be part of the US visit, as it was not a “full blown” investor roadshow. He said taking labour and business representatives on the roadshows had proven useful in the past. “I have no intention of changing that,” he said.
Gigaba also moved to defuse controversy emanating from his newly-appointed advisor, Chris Malikane’s recent statements which contradict government policy on nationalisation.
He said he had reined Malikane on Tuesday.