20 June 2001
Chairperson and Honourable Members
I am pleased to table to this plenary the Eskom Conversion Bill today. I wish to take this opportunity to commend the Chairperson, Mr Fenyana and members of the Select Committee on Labour and Public Enterprises for their sterling work and discipline displayed during this challenging period. I am aware that because of the nature of the Bill, there is consensus amongst the various political parties on the object and mechanisms of this Bill. Allow me also to thank the various stakeholders who made submissions and engaged with my Department on the content of the Bill. I will always value these engagements, which have impacted positively on the content and quality of the Bill we are tabling before you today.
Chairperson, this Bill has its origin in the Eskom Amendment Act of 1998. You will remember that Eskom has previously not been subjected to tax nor liable for the payment of dividends to Government as shareholder. The Eskom Amendment Act of 1998 paved the way for the removal of Eskom's tax-exempt status and also required the Minister of Public Enterprises to incorporate Eskom as a public company in terms of the Companies Act.
I must emphasise that this is a technical Bill that seeks to incorporate Eskom as a public company so that it can be governed by the Companies Act. It seeks to achieve this objective in a manner that will deem Eskom to be converted into a public company without interfering with any of its current operations and obligations.
Honourable members, to restate this fundamental point, there will not be any tampering with the running of Eskom as a business despite the repeal of the Eskom Act of 1987. To ensure continuity, the shareholder compact as well as the Memorandum and Articles of Association of the converted Eskom, will serve as custodians of any responsibilities imposed by the Eskom Act, even beyond incorporation
Chairperson, allow me to highlight some of the key benefits of the conversion. They are as follows:
Chairperson, this Bill is not about the privatisation of Eskom. The reality of the matter is that the State remains the sole shareholder in Eskom. The fears generated in the public domain and carried by editorials of various newspapers is clearly unfounded. When I see a poster saying "Hands off Eskom", it reminds all of us of the critical role that Eskom continues to play in the quality of life of the people and in the whole economy. Government will not be irresponsible and does not seek to destroy the capacity (in Eskom) built over many decades. The strategic challenge for the Government, through its restructuring programme, will be to enhance Eskom's capacity in a strategic manner towards our goals of growth and a better life for our people.
Let me emphasise that the issue of Eskom's ownership and the change thereof is a policy issue that has not been finalised by Government as yet. The Conversion Bill does not in any way pre- empt and/or limit the policy and restructuring options that could be adopted.
Even though as government, we have stated our approach regarding the restructuring of the energy sector, this is done within the context of retaining Eskom as a dominant energy player. It is Government's intention to engage with Labour on the restructuring of Eskom.
The place for such engagement is not the forum aimed at discussing the Eskom Conversion Bill, but the National Framework Agreement between government and organised labour. Therefore, I wish to reiterate the Government's commitment to a rigorous engagement with Organised Labour on the energy sector-restructuring plan.
Honourable members, my office has received enquiries from the various provinces such as the Free State, Western Cape, and others regarding the impact of this Bill on the price of electricity. I must state categorically that this particular Bill will not affect the price of electricity. There is no link between the conversion bill and increases in the price of electricity.
In any event, it is important to point out that increases in the price of electricity must be approved by the National Electricity Regulator (NER) and Eskom is therefore not in a position to unilaterally do so without following the necessary approval process.
Government's commitment to Eskom's developmental role in our society is beyond any reproach. The Bill provides that the Memorandum and Articles of Association, as well as the Shareholder Compact, must take into account, amongst others, Eskom's development role. This is proof enough of Government and Eskom's commitment to making electricity accessible to all our people. We have stated before that Eskom occupies a strategic position in our economy and is critical to the realisation of Government's efforts for a better life for all South Africans.
Honourable members, you will agree with me that it has not been easy to come this far. Let me therefore conclude by thanking you sincerely for having turned this process into a reality.
Allow me, Chairperson, to express once again a word of gratitude to Advocates Selokela, Mbangeni and Mkhize from the Office of the Chief State Law Advisor for the advice and guidance they provided. Allow me also to thank the team from Eskom: Dr Benji Mothibedi, Mr Mpho Matjila and Mr Mohammed Adam, together with officials from the Department for their commitment in taking forward the mandate of the Government despite the pressures and many obstacles.
I thank you