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Eskom to raise over R2bn through sale of non-core properties

Total disposals to date is around R600m, following the latest sale of two high rise office buildings in Kimberley and Johannesburg.
Image: Waldo Swiegers, Bloomberg

Debt-laden Eskom’s aim to raise more than R2 billion through disposing of some of its non-core properties seems to be progressing, with the group announcing further sales on Tuesday.

The national power utility said in a statement that it has sold two high-rise office buildings in Johannesburg and Kimberley to the Department of Human Settlements, Water and Sanitation for R76.1 million.

It noted that the latest sales would help “relieve some of the accommodation pressures faced by university students and for social housing”. However, the sale also raises much-need capital for Eskom, which has debt of around R460 billion and annual debt-servicing costs of around R30 billion.

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The R76.1 million raised from the latest disposals may seem like a drop in the ocean, but it is part of Eskom’s bigger non-core assets sales plan.

“Eskom’s approved strategy [is] to responsibly dispose of non-core immovable properties. In total, Eskom aims to raise more than R2 billion from the sale of non-core property,” the embattled state-owned enterprise (SOE) noted in its statement.

Responding to a Moneyweb query on how much has been raised so far as part of the non-core property disposal plan, Eskom spokesperson Sikonathi Mantshansha confirmed that the total is around R600 million.

“There are some properties that have been sold previously, particularly farmland, and many others currently on the market. Last year Eskom raised more than R500 million from these sales…Together with the latest sales, Eskom has raised around R600 million,” he explained.

According to Eskom, the Kimberley and Johannesburg properties in the latest sales were previously utilised as regional offices.

“Staff have been moved to other locations as part of Eskom’s drive to optimise space and derive maximum value from its extensive property portfolio,” it noted.

“The property disposal process is in line with Eskom’s unbundling process and its bid to raise capital,” it added.

The Department of Human Settlements, Water and Sanitation has been given the first right of refusal on all Eskom properties with a residential potential, in line with government policy.

“The department will therefore convert the Kimberley Trust Centre [one of the tallest buildings in the Northern Cape city], and the 26-storey Regional Office in Johannesburg into residential housing units, which will assist the department towards meeting its mandate of providing social housing,” Eskom pointed out.

“In terms of the sale agreement the Kimberley building will be converted into social housing units to meet the demand for residential units while the Braamfontein building will enable the department to respond to the accommodation needs of university students in Johannesburg,” it added.

Eskom said that it continues to explore similar opportunities in other areas where it owns non-core property stock.

“It is expected that sales of Die Wilge Flats outside the Kusile Power Station at eMalahleni and the Lephalale Stands near the Medupi Power Station will be finalised during the first half of the current financial year.

“Other non-core immovable property is being offered for sale through the government’s process of property disposal,” it said.

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Rather partially privatize it.

From the article it looks like government wants certain assets in Eskom to be transferred to other government departments before the sharks get their chance. What they do not realise, is that when there is no meat on the bone far fewer private companies will go for it.

The emphasis is on stopping the ANC corruption, the overemployment, the premiums for Procurement and stopping Govt inteference.

Selling to other government entities is basically a journal entry – it is not raising cash.

If I think back to what I know about state entities disposing of their property (SANRAL for example), it usually goes to some empowered (ANC) connection after a very opaque procurement “process” (if there is one at all) and at a fraction of its open market value. Now why would Eskom be different? Same vultures and hyenas, different carcass.

In the scale of things R2 billion is chicken feed.

Dumping assets and dropping it into the big black hole, yes pun intended, does nothing at all for the problem, ie the running costs. 20000 idle employees at R800000 a year is R16 billion. Now that is a saving.

Does this mean that the taxpayer has paid for these building twice?

The taxpayer actually paid 4 times for that property. The taxpayer has funded the initial purchase of the land when it was acquired by Eskom, plus the taxpayer is liable for the debt that remains with Eskom. Then the taxpayer is funding the transaction for the Department of Human Settlements and the taxpayer is liable for the debt that the state took on to fund that department.

They would have unlocked some economic potential if they sold the land to the private sector, or even if they give the title deeds to that land to the new residence. That won’t happen though because the state will use their monopoly on the property to bribe voters, and the taxpayer will be on the hook again.

End of comments.

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