CAPE TOWN – Finance Minister Tito Mboweni faces a baptism of fire when he presents his maiden Budget on Wednesday.
Mboweni’s most crucial task is to unveil a rescue plan for Eskom after the economy was left reeling following days of load shedding.
The power utility is riddled in debt and aging power plants are failing, while new ones, like Medupi and Kusile, have design faults and aren’t working properly.
President Cyril Ramaphosa’s made it clear Eskom has to be restructured, but he’s facing blowback from unions who see this as a move to privatize. But economists say labour leaders are mistaken.
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A limping economy, revenue shortfalls and huge demands on the public purse are challenges in themselves, but the quagmire Eskom is in is a threat to the economy as a whole.
Economist Iraj Abedian says union leaders are wrong to see unbundling Eskom as privatization.
“Keeping Eskom as is not viable. It’s plain and simple. To preserve jobs in a broader economy you have to do what it takes for the sake of the working class, for the sake of the poor. On this issue, unions have their facts wrong.”
Nedbank’s chief economist Dennis Dykes says splitting Eskom into three parts would allow for better management of generation, transmission, and distribution.
“I think a lot of arguments against more founded in ignorance than understanding what restructuring is about.”
Dykes says whatever plan Mboweni comes up with, it will have to be credible and show that there’s light at the end of the tunnel.