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Government must release its hold on Eskom and give investors a chance

The biggest problem with Eskom is an ideological one. Government is so set on the control of this strategic institution that it prefers to rely solely on funding from user tariffs. This reliance is causing massive harm to the economy in that companies are closing down and will be forced to do so as a result of increasing unaffordability of electricity. The above in turn will cause job losses.

The effect on households is similar. Rising Eskom tariffs will add to the production costs of consumer goods, having an inflationary effect, making it more difficult for ordinary citizens to survive.

The solution is fairly simple and requires Government to adopt a new paradigm of allowing private equity investment into Eskom. Investors are standing waiting for the opportunity to invest because of the handsome profits that Eskom is making, which is about 8%. In order to retain control over this strategic asset, Government can always retain a 51% share.

We can only hope that Government will make the decision timeously, before irreparable harm is done to the economy and we start seeing greater levels of civil unrest.