South Africa (SA) will push ahead with breaking up power utility Eskom and creating a standalone company to run the transmission grid, President Cyril Ramaphosa said on Thursday, a key reform being monitored closely by international investors.
Africa’s most industrialised economy has been hobbled for years by rolling outages as state owned Eskom struggles with ageing plants and weak finances.
Splitting the company is meant to attract private capital and build a more modern, reliable electricity system. Power transmission is one of the biggest constraints to new electricity supply and economic growth.
In the State of the National Address, Ramaphosa confirmed plans for “a fully independent state owned transmission entity” that will own and operate grid assets and the electricity market.
He assigned a task team under the National Energy Crisis Committee to oversee the restructuring and deliver a report within three months with clear implementation timelines.
Ramaphosa’s announcement follows an update from Electricity Minister Kgosientsho Ramokgopa in December, which proposed keeping transmission assets as an Eskom subsidiary.
“This issue has caused major concern, with international investors and local business leaders starting to question the government’s commitment to the reform programme,” said Busisiwe Mavuso, Chief Executive Officer of Business Leadership SA.
Olga Constantatos, Credit Head at Futuregrowth Asset Management, said unbundling Eskom was intended to spur competition and private investment in power generation after decades of monopoly control.
Private sector investment in renewables has already mobilised more than $12.5 billion and added 6 000 megawatts of capacity without weighing on Eskom’s balance sheet.
–Reuters–
