A Four-Headed Future: Eskom’s Restructuring Plan Clears a Critical Hurdle

South Africa’s monolithic power utility is a step closer to its most radical transformation. Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, has formally approved Eskom’s revised unbundling strategy, paving the way for the creation of a new holding company with four separate subsidiaries by 2030. The plan is hailed as the foundational step toward a competitive electricity market and, ultimately, more affordable power. But a familiar spectreR105 billion in crippling municipal debtthreatens to derail a key part of the process.

The newly approved structure includes:

1. National Electricity Distribution Company of SA (NEDCSA) – to manage distribution.

2. GenerationCo (GxCo) – to house the existing coal and other power stations.

3. Eskom Green – a new subsidiary dedicated to renewable energy projects.

4. National Transmission Company SA (NTCSA) – already legally separated in July 2024.

The Municipal Debt Deadlock: A R105bn Roadblock

While the blueprint is set, the execution faces a formidable barrier. Eskom has warned that the unbundling of the NEDCSA distribution entity is “largely dependent on a solution to municipal debt.” With municipalities owing a staggering R105 billion (about R62 billion of which is likely to be written off), spinning off a distribution company saddled with these bad debts is financially untenable. This debt crisis remains the single biggest threat to the reform’s timeline and success.

The Vision: Competition, Green Energy, and Stability

Eskom CEO Dan Marokane framed the approval as “the next stage of the groundwork to enable more affordable and competitive pricing.” The strategy aims to drive efficiency, diversify supply, and create a level playing field for private investors. A key new player is Eskom Green, tasked with developing at least 2GW of renewable capacity by 2026, signaling the utility’s direct push into the green energy race.

The plan also confirms the establishment of an independent Transmission System Operator (TSO) outside Eskom to ensure fair grid accessa cornerstone of the competitive market envisioned by the Electricity Regulation Amendment Act.

A Phased March to 2030

Eskom emphasised a “carefully sequenced” and phased implementation, targeting completion by 2030. This gradual approach is designed to manage financial, legal, and operational risks while building the necessary skills and systems.

The approval marks a significant political and strategic commitment to breaking up Eskom’s century-old vertically integrated model. The vision is clear: a future of separate generation, transmission, distribution, and green energy companies. Yet, the journey there is fraught, and its first real test is not technical, but financialfinding a resolution to the municipal debt albatross that could keep the new distribution company grounded before it even takes flight.

{Source: Citizen}

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