The Department of Public Enterprises (DPE) says it is making marked progress on the unbundling of Eskom into three separate companies – alongside a new holding company to oversee them.
Eskom is currently in the process of being split into three companies that cover its main operations: Transmission, Distribution and Generation.
The move was first announced by President Cyril Ramaphosa in his 2019 State of the Nation Address, but until now, progress has been slow.
More recently, work to unbundle the company has hit several key milestones, with the DPE hoping to have the process materially completed by March 2024 – the end of the current financial year.
In a presentation to the portfolio committee on public enterprises on Tuesday, the department outlined the timelines and progress made so far.
Under the proposed structure of the ‘new’ Eskom, a new holding company (dubbed NewCo) will operate with three subsidiaries that function independently.
- Generation: Eskom Holdings Generation (current Eskom)
- Transmission: National Transmission Company of South Africa (NTCSA)
- Distribution: National Electricity Distribution Company of South Africa (NEDCSA)
The most progress has been seen with NTCSA, the department said, with the legal separation of the transmission company into a subsidiary now at an advanced stage.
The NTCSA was incorporated in 2021, and various licence applications to energy regulator Nersa have been made. These include facilities, trading, importing and exporting.
In July 2023, Nersa approved the licence to operate the transmission system within the boundaries of South Africa. However, this excluded the trading and import/export applications.
Eskom’s plan is to commence the trading of the transmission company by November 2023, the department said. However, this is contingent on the approval of the trading licence by Nersa.
“The designation of the Transmission Entity as a buyer of energy from Independent Power Producers is at an advanced stage,” it said.
“The application for the designation of the NTCSA as a buyer has been approved by the Department of Mineral Resources and Energy and is with Nersa for consideration.”
Meanwhile, the appointment of the NTCSA board is underway; amendments to the Electricity Regulation Act are with Parliament for approval; labour restructuring processes and consultation are ongoing; systems are being put in place; and other matters and approvals are being finalised.
The transfer of assets, people and systems should start in September, the department said.
Restructuring the distribution company still has a long way to go.
The functional separation of the business was completed in March 2021, the department noted, and the distribution company itself was registered with the Companies and Intellectual Property Commission (CIPC) in October 2022.
Eskom will next be applying for a distribution licence to Nersa and engaging lenders seeking consent for a legal separation of the subsidiary.
A key part of the process, however, is to engage with National Treasury over municipal debt – which is now approaching R64 billion – to ensure the new company can be financially sustainable.
The minister still needs to appoint a permanent board, and management needs to deal with other matters, such as the transfer of staff, systems and assets.
Meanwhile, the next steps are also being taken to establish the NewCo to oversee these operations.
Eskom said it has finalised the due diligence report for the establishment of the new holdings company, and this will be submitted to the DPE for consideration.