South African Government May Move Eskom to Energy Ministry

South African President Cyril Ramaphosa is considering changing the ministries responsible for some of its biggest state-owned companies, including power utility Eskom Holdings SOC Ltd., to better align them with their functions, people familiar with the matter said.

Eskom, arms manufacturer Denel SOC Ltd., South African Airways Ltd. and other entities are currently the responsibility of the Department of Public Enterprises, headed by Pravin Gordhan.

Eskom may be transfered to the minerals and energy ministry, under Gwede Mantashe, the people said. Denel may move to the defense ministry and SAA could shift to transport, they said, asking not to be identified as an announcement has not been made.

Gordhan’s fate is unclear. More clarity may be provided if Ramaphosa reshuffles his cabinet, the people said.

Tyrone Seale, Ramaphosa’s acting spokesman, said he couldn’t comment on potential changes in the national executive. Richard Mantu, the DPE’s spokesman, declined to comment.

The move, if implemented, could slow attempts to move Eskom away from using coal to generate electricity and reduce South Africa’s greenhouse-gas emissions. Mantashe, a former labor-union leader who worked in the coal industry, backs the continued development of coal-fired power plants. Eskom supplies almost all of South Africa’s power.

“With its current leadership combining the Department of Mineral and Energy Resources and Eskom would be a disaster,” said Peter Attard-Montalto, head of capital markets research at Intellidex. It “would likely see the situation become untenable,” he said.

No final decision on the moves has been made, the people said.

Last year, Ramaphosa appointed a council to reposition and strengthen the governing framework of state-owned companies, address their liquidity challenges and implement turnaround strategies. The entities are struggling with debt loads after years of mismanagement and corruption.

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