South Africa’s plan to restructure its state-owned power utility, Eskom Holdings SOC Ltd., by splitting it into three subsidiaries is facing pushback from creditors and foreign funders.
- South Africa plans to restructure Eskom Holdings SOC Ltd. into a single holding company with distinct subsidiaries for distribution, generation, renewable energy, and transmission.
- This updated strategy diverges from the prior proposition to split Eskom into three entirely independent entities.
- The revised approach risks jeopardising the $8.3 billion Just Transition Partnership aimed at reducing coal dependency.
- Key bondholders and parties anticipated further independence of Eskom’s entities, aligning South Africa with global unbundling practices.
South Africa’s plan to restructure its state-owned power utility, Eskom Holdings SOC Ltd., by splitting it into three subsidiaries is facing pushback from creditors and foreign funders.
The government’s “revised unbundling strategy,” approved by Electricity Minister Kgosientsho Ramokgopa, will divide Eskom into distribution, generation, renewable energy, and transmission units, but all will remain under a single holding company.
This differs from earlier expectations that the utility would be fully separated into three independent entities, as originally proposed by President Cyril Ramaphosa in 2019, Bloomberg reported.
Financial and partnership risks
The modified plan could jeopardise the $8.3 billion Just Transition Partnership, a program supported by European countries to help South Africa reduce its reliance on coal-fired power.
Futuregrowth, a major Eskom bondholder, had anticipated that the National Transmission Co of South Africa (NTCSA) would operate independently, as is standard practice internationally.
Eskom, however, said retaining the NTCSA within the holding company is not a new decision and aligns with the Electricity Regulation Amendment Act.
Globally, more than 100 countries, including the UK, Russia, and India, have undertaken similar unbundling exercises, creating independent transmission and generation entities.
Eskom’s former CEO, Andre De Ruyter, had suggested listing the transmission company to finance its growth, describing unbundling as “absolutely critical for the electricity industry in South Africa to move forward.”
