Unbundling SAA, Eskom ‘could save it from collapse’
Economist Azar Jammine believes that the unbundling of state-owned entities is the only way to save the financially stricken companies from collapse.
President Cyril Ramaphosa announced in his State of the Nation Address that Eskom would be split into three entities - generation, transmission and distribution.
On Monday, Reuters reported that the South African Airways (SAA) would also be split into three business units.
The news organisation company quoted chief executive officer Vuyani Jarana as saying the firm, which was given a R5 billion bailout in 2018 to shore up its balance sheet, would be split into domestic, regional and international business units, each with their own management.
Jammine says the unbundling of some entities could help to clarify where the cost strengths and efficiency lay in order to cuts costs.
"It also helps to promote efficiency by forcing units to try and stand on their own two feet, and theoretically it also ends up paving the way for privatisation of these entities.
"It would reduce the liabilities the government would have to carry and in the long run that would be positive to the economy.”
Eskom’s debts currently stands at R420 billion and cash-strapped SAA has not made a profit since 2011.