Treasury validates selling stake to Vodacom

Government had a 13,91 percent stake in Vodacom, which it has sold to assist Eskom.

Government had a 13,91 percent stake in the cellular provider, which it has now sold to help fund the R23 billion allocated to Eskom. Picture: Reinart Toerien/EWN.

JOHANNESBURG - National Treasury says it's sold its stake in Vodacom to the Public Investment Corporation (PIC) for a number of reasons including its 'natural connection' to government.

Government had a 13,91 percent stake in the cellular provider, which it has now sold to help fund the R23 billion allocated to Eskom.

Treasury's Lungisa Fuzile says, "It was a question of the amount of money that we needed and who had the balance sheet to give us the amount plus other price related factors. There is a good advantage with the PIC given the natural connection to government."

Earlier this week, the National Energy Regulator of South Africa rejected Eskom's request for a further tariff hike.

The power utility, which is struggling to keep the lights on in Africa's most advanced economy, is facing a funding gap to 2018 of up to R200 billion.

In addition to the funds from the Vodacom sale, the government is converting a R60 billion subordinated loan granted to Eskom into equity.