SOUTH AFRICA – The government of South Africa has announced plans to unbundle utility Eskom into three divisions; generation; transmission and distribution by December 2022.
The separation of the transmission division is expected to be completed by December this year, while the separation of the generation and distribution divisions is expected to be completed by December 2022.
The South African government allocated Eskom US$3.86 billion for 2020/2021, of which US$413.4 million of the equity allocations had been provided by 30 September 2020.
The utility has been allocated a further US$2.18 billion for 2021/2022 by the government.
The funds are meant to stabilise the utility while the government restructures it into three separate entities under Eskom Holdings.
The unbundling will be overseen by Eskom CEO André de Ruyter, along with the directors-general of national treasury, the department of mineral resources & energy, and the department of public enterprises.
The utility began implementing revised business models for each division and appointed divisional boards at the end of March last year and these boards are accountable for strategy, business performance and functional compliance.
‘’The funds are meant to stabilise the utility while the government restructures it into three separate entities under Eskom Holdings”
The restructuring of Eskom is in line with its turnaround strategy, which was approved by public enterprises in 2019.
The beleaguered utility has, over the past decade, consistently relied on government support and borrowing to run its operations as it does not generate sufficient revenue to meet its commitments, which include high levels of debt and debt-service costs.
The poor performance of Eskom’s plants, which subsequently requires the utility to implement frequent power cuts, continues to constrain South Africa’s economic recovery as was shown in 2020 when Eskom implemented load shedding for 52 days despite there being reduced economic activity due to the lockdowns in response to Covid-19.
Although the government plans to bring in private partners for electricity generation to supplement power generated by Eskom, load shedding is expected to continue well in 2022.
Treasury said the Independent Power Producer (IPP) office within the mineral resources department is in the process of evaluating bids for 2GW of emergency power from IPPs to plug into the electricity supply shortfall.
Additionally, the department is expected to initiate a fifth bid window to buy 2.6GW of wind and solar power from renewable energy IPPs with the rojects expected to generate power from July 2022.
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