South African government allocates ZAR88 million for Eskom’s restructuring

The South African government has allocated state-owned power utility, Eskom Holdings SOC Limited (Eskom), with ZAR56 billion for 2020-21, of which ZAR6 billion of the equity allocations had been provided by September 30, 2020.

In addition, the utility has been allocated a further ZAR31.7 billion for 2021-22 by the government. The funds will be utilised for stabilising the utility while the government restructures it into three separate entities. Eskom is on track for unbundling its transmission arm and establishing a separate entity by December 2021. As per the restructuring roadmap presented in November 2019, the vertically-integrated utility plans to unbundle into three separate utilities each, for generation, transmission and distribution, by the end of 2022. The three power companies, post the unbundling, will remain under a stateowned Eskom holding. Over the years, Eskom has been dealing with severe financial stress and has not been able to provide steady power supply. Currently, the transmission system sources power from Eskom’s generators and independent power producers (IPPs), which represent a maximum of 30 per cent of total supply, before distributors deliver it to consumers. The new transmission entity (TE) will undertake the system operator’s functions and will be responsible for sustaining system balance by taking up least-cost generation options. The entity will also act as the market operator, whereby it contracts with suppliers and distributors of electricity. The creation of the new TE will also drive a more transparent approach to electricity tariffs.

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