South Africa’s Eskom considers privatization of its finance company

South Africa’s power firm, Eskom, is considering privatization of its mortgage businesses to stabilize its financial situation, and the National Treasury has begun a pre-qualification process for bids. This would be the first major privatization deal under President Cyril Ramaphosa.

The state owned energy firm with a financial loan book of R8.7bn (over $724 million) is exploring the possibility of a total shares sale in all Eskom Finance Company (EFC)—a subsidiary that specializes in mortgage lending to employees—through a competitive tender process, as shown on a government tender website.

Since assuming office, Ramaphosa has been revamping the country and Eskom has been top priority as he looks to reverse years of economic stagnation and mismanagement.

Earlier this year, Eskom narrowly avoided a liquidity crunch through 20 billion rand it secured in short-term funding from banks. However, its future is uncertain because of financial crisis stemming from reduced power demand and a widespread allegations of corruption that has greatly affected profits.

In February ratings agency S&P Global referred to Eskom as “junk” following the management’s report that the company’s balance sheet was not sustainable after a sharp slide in profits in January.

The pre-qualification period for the share sale is scheduled to end on May 17.