NATIONAL NEWS - The start of the breakdown of Eskom as a monopoly supplier and provider of electricity to South Africa will take three years.
Government has finally unveiled the timelines and plans to “unbundle” the debt-laden utility, that supplies over 90% of the electricity in South Africa with ageing, poorly maintained fleet that is struggling to meet electricity demands.
After acknowledging that Eskom cannot continue to operate as a vertically-integrated utility, Public Enterprises Minister Pravin Gordhan outlined how the government plans to unbundle the institution, starting by immediately establishing transmission and generation subsidiaries within Eskom Holdings.
The functional and legal separation of Eskom, described as the largest institutional transformation the country has undertaken in a strategically important area in recent history, will be completed by 2022.
The special paper on the roadmap for Eskom’s future comes as South Africa await details on how the government will approach the utility’s bailout from Finance Minister Tito Mboweni’s mid-term budget policy speech on Wednesday.
Not privatisation
“We have got to change the monopoly culture and monopoly pricing,” said Gordhan.
“The fundamental issue here is saying monopolies by their nature are wasteful; monopolies by their nature are extravagant costs; monopolies by their nature are self-interested. They don’t look outside of themselves.”
But this will not be done through privatisation as envisaged by Mboweni’s economic discussion paper, at least for the medium-term.
Transmission
The transmission entity will be 100% government-owned. Its core function will be to act as an “as an unbiased electricity market broker”.
The business will have two key roles: acting as a systems operator that will invest in and manage the transmission grid that includes 33 000km of transmission lines, and as a market operator that will balance demand with supply on a least-cost basis.
