Eskom to split into three separate entities

SONA: Eskom turnaround strategy to be implemented, and the company to be split into three.

President Cyril Ramaphosa delivered his second State of the Nation Address on Thursday, acknowledging the great risk struggling Eskom is posing for South Africa. 

Eskom owes R419 billion in debt and is struggling to service this debt while maintaining its infrastructure. 

Ramaphosa said that the government will immediately start implementing a turnaround strategy by splitting Eskom into three different companies focusing on generation, transmission and distribution. 

The president said: 

“To bring credibility to the turnaround and to position South Africa’s power sector for the future, we shall immediately embark on a process of establishing three separate entities – Generation, Transmission and Distribution – under Eskom Holdings.”

He added, “We need to take bold decisions and decisive action. The consequences may be painful, but they will be even more devastating if we delay.”

Ramaphosa said the government will minimise any adverse economic cost to consumers and taxpayers. “As we address the challenges that face Eskom we will ensure that there is meaningful consultation and dialogue with all key stakeholders.

“We will lead a process with labour, Eskom and other stakeholders to work out the details of a just transition, and proper, credible and sustainable plans that will address the needs of all those who may be affected.” 

He said that the government has supported Eskom’s nine-point turnaround plan introduced in November 2018, and will continue to support Eskom’s balance sheet. He added that the Minister of Finance Tito Mboweni, will provide further details on this in his Budget Speech

“In line with this plan, Eskom will need to take urgent steps to significantly reduce its costs. It will need more revenue through an affordable tariff increase,” said Ramaphosa.