Special paper on the future of Eskom expected soon

“This paper will reflect the urgent work that is taking place to identify options to resolve the debt challenge, the process for restructuring Eskom and importantly, to ensure a just transition,” the power utility said in a statement.

President Cyril Ramaphosa during his State of the Nation Address in February said Eskom is too big and important for government to let it fail. He announced the restructuring of Eskom into three entities, starting with the creation of a transmission entity.

This was a recommendation of the Presidential Sustainability Task Team based on both international trends and a study conducted by Eskom and in line with government policy as outlined in the White Paper on Energy 1998.

Eskom is also implementing some of the key recommendations of the Technical Review Team to ensure power stations operate at optimal levels.

“Stabilisation of generation is also critical. To ensure operational discipline, Eskom will deploy about 200 technical and engineering staff across the power stations. Power station managers will play a critical role to ensure proper maintenance and adequate supply of quality coal,” Eskom said.

Financial obligations

To ensure Eskom is able to meet its financial obligations, the minister of finance during his budget speech announced an Eskom support package of R23bn for the next three years.

The minister also tabled the Special Appropriation Bill to provide Eskom additional support of R59bn.

The additional support (R23bn over three years add to 2019/20: R26bn and 2020/21: R33bn) brings the total amount to R128bn over a three-year period.

The funding was conditional upon the establishment of the chief restructuring office (CRO) headed by Freeman Nomvalo. This office will deal with the power utility’s debt and interrogate various proposals to resolve Eskom financial challenges.

Eskom said Nomvalo has already started work and a number of options to resolve the debt and financial position are being evaluated by a team of experts.

Separation of transmission

The key component of restructuring is the separation of transmission. Since the announcement of the separation, government, in particular the president and the minister of public enterprises have had initial engagements with unions.

The consultations on the future of the power utility are expected to be ongoing at Eskom management level and government level.

Eskom said the energy sector is going through a global transition driven by new technologies and environmental concerns. “It critical that the transition is just, in that it must have a minimum impact on jobs and local economies. Government will ensure that appropriate consultations will occur in particular with organised labour and other stakeholders on the position paper and the implementation of the separation project of Eskom,” it said.