PREVIEW
A September deadline for a new wholesale electricity market sidelines the chairman of the power utility and faces push back from the unions and foes of the President
President Cyril Ramaphosa's endorsement of the Eskom Restructuring Task Team's first-phase report has settled, at least for now, a months-long tussle over who controls South Africa's electricity future. The plan strips Eskom of its national grid monopoly, handing transmission and market operation to a new National Transmission Company-led platform, the South African Wholesale Electricity Market, targeted for launch in September.
Eskom chairman Mteto Nyati insists the utility is ‘agnostic about who owns the assets,’ but his demand for an urgent meeting with the president, alongside a threatened legal challenge from the National Union of Mineworkers, suggests the fight over implementation has only begun.
The Presidency says that it has tasked the National Treasury with outstanding issues, including how to deal with asset valuations, obligations to lenders and the R119 billion (US$7.35bn) in debt owed to Eskom by local authorities.
Nyati and Eskom’s board point to a warning from credit ratings agency Moody’s in May stating that rapid restructuring could weaken Eskom’s credit profile.
Nyati says the R119bn debt must be resolved before restructuring takes place. Last year, Eskom recorded its first profits in eight years but the utility’s debt profile stood at R490bn, roughly 15 times its earnings (AC Vol 66 No 24, First the good news – then reality bites). A significant portion of the utility’s assets has been pledged as security to lenders.
The NUM has also threatened legal action against the government, saying that there had been ‘no meaningful engagement’ with it over the Eskom plan.
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