Eskom unbundling ‘vital’
Gordhan insists measures key to secure electricity supply security at an efficient cost
THE unbundling of Eskom was aimed at ensuring the power utility provided low-cost electricity to businesses and consumers, Public Enterprises Minister Pravin Gordhan said yesterday at the official announcement of the first phase aimed at unbundling the stateowned entity.
President Cyril Ramaphosa first announced the plan in February during his State of the Nation address.
Yesterday, Gordhan said the plan would see Eskom made up of three subsidiaries: transmission, generation and distribution, with a transmission entity expected to be up and running by March.
He said the unit would also present a choice for the government to purchase energy from different providers, including private producers.
A new board for the entity would be announced soon.
The SA Federation of Trade Unions has rejected the “privatisation” or unbundling of Eskom outright, with secretary-general Vavi Zwelinzima saying it was ready to picket against the plans, and the federation instead wanted extensive consultation.
But Gordhan said the government would still have to undertake research on an appropriate model to take the plan forward.
He said the new business model was part of the Integrated Resources Plan (IRP) unveiled by Mineral Resources and Energy Minister Gwede Mantashe. The IRP allows an energy mix of coal, gas, nuclear and energy renewables.
“A single entity creates large risk and there is no diversification. It is also unable to ensure electricity supply security at an efficient cost. Eskom, as a provider of 95% of electricity, lacks competition,” Gordhan said.
According to Gordhan, state capture resulted in systemic damage at Eskom and it was not a matter of “people stealing a few billion and fleeing to an island”.
“The effect of state capture on Eskom was endemic. Skilled people were chased away, especially black professionals.”
He maintained that their priority in ensuring that Eskom adopted more cost-saving measures was to organise a meeting with seven coal companies, which were allegedly making 100% profits from their deals with the utility.
As Finance Minister Tito Mboweni prepares to announce plans for Eskom during his Medium Term Budget Policy Statement in Parliament, Gordhan maintained that a culture of non-payment, especially among municipalities, who owed Eskom more than R36.5 billion, was a problem.
DA spokesperson on public enterprises Natasha Mazzone said the road map for Eskom “failed to provide a detailed outline of how this will be achieved and the related cost estimates involved”.
Mazzone said Gordhan was also silent on the role of independent power producers, saying: “This uncertainty and lack of clarity in energy policy is what has led South Africa to the energy crisis it currently faces.”
She accused him of failing to discuss the road map with the DA, saying he had to “put his partisanship aside and reach across the aisle…”
AfriForum has welcomed the announcement and urged that the cost of coal be investigated urgently. Eugene Brink, strategic adviser for community affairs at AfriForum, said the economy was unable to continue paying for these inflated costs.
“More players can force Eskom to manage its affairs more effectively, and if it does not succeed, the private sector is ready to fill the gap,” Brink said.