S.African government sells Vodacom stake to fund power firm
The South African government announced Wednesday it had sold its stake in telecommunications giant Vodacom to raise cash for state-owned energy provider Eskom, which is struggling to keep the lights on.
Failure to generate enough power has forced Eskom to impose rolling black-outs that plunge swathes of the country into hours of darkness almost everyday.
“The proceeds from the sale will be used to finance the 23 billion rand ($1.9 billion) allocation to Eskom,” the treasury said in a statement.
The decision to dispose of its 13.91 percent stake in Vodacom, Africa’s unit of the Vodafone Group Plc, was “the most viable option” to bolster Eskom, it said.
The power company, which generates more than 95 percent of South Africa’s electricity, has been weakened by years of under-investment and ageing infrastructure, as well as governance problems.
The outages, which have escalated in recent months, have cost companies millions of dollars in lost production and business, and have held back growth of Africa’s most advanced economy.
“Severe electricity shortages… have become the greatest obstacle to growth, reducing economic activity, sapping confidence, and discouraging investment,” the International Monetary Fund (IMF) said last week.
The utility this week failed in its bid to secure a huge tariff increase of up to 25 percent for the year to March 2016.