Eskom to raise over R2bn through sale of non-core properties

Debt-laden Eskom’s aim to raise more than R2 billion through disposing of some of its non-core properties seems to be progressing, with the group announcing further sales on Tuesday.

The national power utility said in a statement that it has sold two high-rise office buildings in Johannesburg and Kimberley to the Department of Human Settlements, Water and Sanitation for R76.1 million.

It noted that the latest sales would help “relieve some of the accommodation pressures faced by university students and for social housing”. However, the sale also raises much-need capital for Eskom, which has debt of around R460 billion and annual debt-servicing costs of around R30 billion.

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The R76.1 million raised from the latest disposals may seem like a drop in the ocean, but it is part of Eskom’s bigger non-core assets sales plan.

“Eskom’s approved strategy [is] to responsibly dispose of non-core immovable properties. In total, Eskom aims to raise more than R2 billion from the sale of non-core property,” the embattled state-owned enterprise (SOE) noted in its statement.

Responding to a Moneyweb query on how much has been raised so far as part of the non-core property disposal plan, Eskom spokesperson Sikonathi Mantshansha confirmed that the total is around R600 million.

“There are some properties that have been sold previously, particularly farmland, and many others currently on the market. Last year Eskom raised more than R500 million from these sales…Together with the latest sales, Eskom has raised around R600 million,” he explained.

According to Eskom, the Kimberley and Johannesburg properties in the latest sales were previously utilised as regional offices.

“Staff have been moved to other locations as part of Eskom’s drive to optimise space and derive maximum value from its extensive property portfolio,” it noted.

“The property disposal process is in line with Eskom’s unbundling process and its bid to raise capital,” it added.

The Department of Human Settlements, Water and Sanitation has been given the first right of refusal on all Eskom properties with a residential potential, in line with government policy.

“The department will therefore convert the Kimberley Trust Centre [one of the tallest buildings in the Northern Cape city], and the 26-storey Regional Office in Johannesburg into residential housing units, which will assist the department towards meeting its mandate of providing social housing,” Eskom pointed out.

“In terms of the sale agreement the Kimberley building will be converted into social housing units to meet the demand for residential units while the Braamfontein building will enable the department to respond to the accommodation needs of university students in Johannesburg,” it added.

Eskom said that it continues to explore similar opportunities in other areas where it owns non-core property stock.

“It is expected that sales of Die Wilge Flats outside the Kusile Power Station at eMalahleni and the Lephalale Stands near the Medupi Power Station will be finalised during the first half of the current financial year.

“Other non-core immovable property is being offered for sale through the government’s process of property disposal,” it said.