The plan to take over part of the power utility is in the right direction. Mike Brown is the chief executive officer.
Duncan Pieterse, head of assets and liability management at the National Treasury, said in an interview that South Africa's Treasury is working on a plan to take over a portion of the utility's debt. The company's bond yields fell because of that.
Brown said in an interview that it made sense to shift a portion of the debt onto the balance sheet. It is there in all economic sense.
The engine that drives Africa's most industrialized nation could be turned around with a debt transfer plan. The economy has been hurt by years of power failures. After determining the amount, authorities will seek cabinet and parliament's approval for the plan.
It will take time, it is complex, legally and economically. You have to take enough debt off their balance sheet so that they are sustainable but not too much to give them a free ride.
The power crisis has been going on for 14 years. The state allowed companies to build power plants of any size without a license if they wanted to sell it to the grid.
The government doubled the amount of renewable energy it buys. A move that will accelerate the country's shift from a dependence on coal for more than 80% of its power towards the use of wind and solar resources.
The president's plan to fix electricity supply is a binding constraint to growth and job creation.
Amogelang Mbatha assisted with the task.
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