Unbundling Power: President Endorses First Phase of Eskom Restructuring

Cape Chamber President Jacques Moolman reflects on latest news about Eskom unbundling

On Friday last week South Africa quietly passed another significant milestone, and it's a big one.  

President  Cyril Ramaphosa endorsed the first phase report of the Eskom Restructuring Task Team.

The mere existence of an Eskom Restructuring Task Team was a significant milestone not so long ago, when milestones were few and far between – milestones on the way up, that is, not down.

Now, four months after the Team was appointed, we not only have a report but an official endorsement of that report.

Better still, we have a report that many will actually enjoy reading, particularly business people hoping for a growing economy.

The Phase I report recommends establishing a fully independent, state-owned Transmission System Operator (TSO) separate from Eskom—supported by immediate interim steps to strengthen the independence of the National Transmission Company of South Africa (NTCSA) and address municipal debt—to pave the way for a competitive wholesale electricity market.

That's more than a milestone -- it's a glowing billboard on the road to a more robust economy free from overweight and underperforming state-owned enterprises.

We commend the multiple stakeholders involved in this process, including senior officials from the Presidency, National Treasury, the Department of Electricity and Energy, Eskom, and the National Transmission Company South Africa (NTCSA).   

We must also give credit to Operation Vulindlela, without which this report might not have been achieved. The restructuring of Eskom is a key strategic Vulindlela milestone.

However, we would be foolish to start adjusting our household electricity budgets just yet. The Restructuring Task Team report may be encouraging, but it remains a report on top of what must be a tottering tower of reports, some of them equally impressive but never implemented. 

Seldom has 32 years of democracy been so reported on.

The Eskom Restructuring project now moves into a three-month Phase II implementation roadmap. This will give us a better idea of what the new transmission entity will look like.

There are still many potential pitfalls to guard against. How independent will the new entity be? How competitive will the electricity free market be, or will one monopoly beget another.  

It would be a sad irony should there be transmission failure between the report and the roadmap, or between intention and reality. 

Lastly, our hope is that this milestone is just of many along the path of structural reform. We have many other underperforming public entities in dire need of a roadmap if we hope to arrive at a more competitive business environment. 

The restructuring should also not lose sight of a fundamental principle: Government's job is to create the right conditions for business to thrive. As our state-owned entities transition from loss-making liabilities into profitable independent entities, the intention should not be to maximise profits but rather to drive down costs to bolster the economy. 

A growing economy would give Government the fiscal wellbeing it seeks, and business the