Eskom pockets R463 million after selling off land, buildings, and equipment
Eskom has sold R269 million worth of its assets over the past five years, including 494 buildings and other facilities and R119.6 million worth of laboratory, transport, and workshop equipment.
However, the proceeds received from the sale of these assets amount to R463 million — 72% higher than their book value.
This is according to public enterprises minister Pravin Gordhan’s response to parliamentary questions from EFF MP Omphile Maotwe.
“Eskom has sold 4,169 assets since 2018. The total value of all 4,169 assets at the time of sale was R269,052,207,” said Gordhan.
“The total proceeds received from the sale of these assets were R463,309,568.”
The most significant asset sales were buildings and facilities; laboratory, transport, and workshop equipment; and land.
The state-owned power utility sold 494 buildings and facilities with a book value of R107.2 million, while it sold 1,903 units of laboratory, transport, and workshop equipment valued at R119.6 million.
Another significant sale was 380 pieces of land for R42 million.
A breakdown of the assets Eskom has sold since 2018 is summarised in the table below.
In his response, Gorhan split the assets into 18 categories. We have consolidated them into six.
| Eskom assets sold since 2018 | ||
|---|---|---|
| Category | Number of units | Net book value |
| Buildings and facilities | 494 | R107,169,000 |
| Computing equipment | 1,300 | R95,000 |
| Furniture and office equipment | 90 | R54,000 |
| Laboratory, transport, and workshop equipment | 1,903 | R119,586,000 |
| Land | 380 | R42,051,000 |
| Rights | 2 | R99,000 |
| Total | 4,169 | R269,054,000 |
Gordhan didn’t provide reasoning for the sale of these assets. However, the proceeds of R463 million likely will have had a minuscule impact on the power utility’s financial situation.
Eskom has debt obligations amounting to R423 billion, and the proceeds of its asset sales would only make a 0.1% dent in this figure.
In February 2023, finance minister Enoch Godongwana, in his 2023 Budget Speech, announced a debt relief arrangement for the power utility that will see it receive R254 billion over three years.
He said the arrangement would go a long way to managing Eskom’s crippling debt and ending load-shedding.
“We are proposing a total debt-relief arrangement for Eskom of R254 billion,” Godongwana said.
“This consists of two components. One is R184 billion. This represents Eskom’s full debt settlement requirement in three tranches over the medium term.”
“Second is a direct takeover of up to R70 billion of Eskom’s loan portfolio in 2025/26,” he added.
However, he noted that the bailout was subject to several strict conditions, including:
- Prioritising capital expenditure in transmission and distribution during the debt-relief period
- Focusing on the maintenance of its existing generation fleet to improve electricity availability
- A ban on new borrowing from 1 April 2023 until the end of the debt-relief period, unless otherwise approved by Treasury
- A ban on the implementation of remuneration adjustments that negatively affect its overall financial position and sustainability
- The debt relief can only be used to settle debt and interest payments
- Eskom must implement the recommendations outlined in an independent assessment of its operations commissioned by the National Treasury
The National Treasury said the goal of the bailout is to strengthen Eskom’s balance sheet, allowing it to restructure and undertake the investment and maintenance required to end load-shedding.
Godongwana noted that a significant contributor to Eskom’s debt obligations is the failure of municipalities to pay for electricity supply from the power utility.
“Undertaking a debt relief of this magnitude without addressing this risk would be counterproductive,” he said.
“We are working with Eskom to provide a solution to this problem, wherein Eskom will provide incentivised relief to municipalities whose debt is unaffordable.”
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