THEBE MABANGA
ESKOM is on a ‘burning platform” to complete its unbundling to overcome its financial and operational challenges, which includes permanently resolving load-shedding in the second half of next year, some 15 years after load-shedding first occurred in 2007.
This is according to Eskom CEO Andre de Ruyter, who briefed parliament’s portfolio committee on public enterprises and the Select Committee on Public Enterprises and Communications.
The virtual briefing heard that the unbundling will now happen at an unspecified after 2022.
De Ruyter used the Burning Platform metaphor used by former Nokia CEO Stephen Elop in a 2011 nemo to staff which required the company to radically change its behaviour or be swept aside by rapid change in the smartphone market suggesting Eskom needs to adapt as quickly to its changing environment.
Eskom’s unbundling was first announced by President Cyril Ramaphosa at last year’s State of the Nation Address and launched through a Roadmap by Public Enterprises Minister Pravin Gordhan in October last year.
De Ruyter described the original timelines attached to it, which would have seen the process completed next year, as “aggressive”.
The unbundling entails the separation of Eskom into a generation, transmission, and distribution subsidiaries.
The Generation division will be open to private players while the Transmission division will own the national grid to give all players fair access. The distribution will own the distribution assets.
A previous attempt at unbundling envisaged Eskom’s distribution assets being pooled with those of Municipalities that distribute electricity to form Regional Electricity Distributors (Reds) but this failed due resistance by municipalities.
The process happens in two stages starting with divisionalisation which is the flowed by legal separation.
Eskom has appointed the MDs of the three divisions and their boards. De Ruyter noted that these are not new appointments but rather existing executives who took on the additional responsibility without extra pay.
Transmission will be set up as a division by December this year to be legally separated in December 2021.
The generation and distributions will be created in 2022 with legal separation to follow at a later, unspecified date.
Asked at what point will Eskom function without dependence on the fiscus, De Ruyter said Eskom will not require any bailout in the current financial year was supported by his interim Chairman Dr Malekgapuru Makgoba and Public Enterprises Minster Pravin Gordhan.
Gordhan told the legislators that Eskom unbundling was designed to address governance and operational challenges so that Eskom does not need bailouts.
But he noted that it needed to be undertaken with caution as it is a delicate process and said he was satisfied at the pace and direction taken by De Ruyter and his team.
Eskom also updated the Committees on its maintenance programme. The utility said it used the lockdown period, which drastically reduced demand but also cost it between R2 billion and R 5 billion in revenue, to undertake “opportunistic” short term maintenance and restore 9000 MW to the grid.
As a result, Eskom says it expects 3 days of stage 1 load shedding this winter. In July, Eskom expects to start on long term “reliability” maintenance which will take about a year and if successful, will finally resolve load shedding.
Parliamentarians welcomed the development but expressed scepticism on both the short and long term load shedding target.
(Compiled by Inside Politics staff)
