Major threat to Eskom

Experts have raised concerns about Eskom’s restructuring, which could present funding problems for Independent Transmission Programmes (ITPs) going forward.

With load-shedding seemingly a thing of the past, Eskom has now turned its attention towards its much-delayed unbundling.

In mid-December, Electricity Minister Kgosientsho Ramokgopa officially approved Eskom’s updated unbundling strategy.

The Bureau for Economic Research’s Roy Havemann described this as a significant milestone in South Africa’s electricity reform process. 

With this strategy, Eskom will be restructured into a holding company with a number of subsidiaries, as well as generation and distribution companies.

Eskom’s unbundling is considered a critical step in establishing a free and open electricity market in South Africa, as it creates a more level playing field where all generators have equal access to the grid.

Under Eskom’s new structure, a holding company called NewCo will operate with three subsidiaries that function independently –

• Generation: Eskom Holdings Generation (current Eskom)
• Transmission: National Transmission Company of South Africa (NTCSA)
• Distribution: National Electricity Distribution Company of South Africa (NEDCSA)

Crucially, Havemann said a Transmission System Operator (TSO) will be spun out as a completely independent state-owned company, separate from the Eskom Group. 

At the same time, he explained that the NTCSA will continue to own, expand and maintain the transmission grid as a subsidiary of Eskom Holdings.

Havemann explained that this model is aligned with the Electricity Regulation Amendment Act (ERAA), which mandates the creation of a fully independent TSO within five years.

However, the legislation stops short of spinning the NTCSA itself out from Eskom at this time.

The most progress made in Eskom’s unbundling so far has been the establishment of the NTCSA. The NTCSA was incorporated in 2021, and Eskom has appointed the company’s board of directors.

In addition, in November 2025, energy regulator NERSA approved the NTCSA’s market operator licence.

While considered a significant milestone in Eskom’s unbundling and the creation of a free electricity market in South Africa, many concerns with the NTCSA’s structure remain.

Independence

Havemann explained that one of the key elements of South Africa’s reform agenda is the Independent Transmission Programme (ITP).

This programme was endorsed by the Cabinet to accelerate the expansion of transmission infrastructure by attracting private investment. 

The ITP is intended to deliver new transmission lines and capacity under a structured procurement programme, which will allow private developers and financiers to participate under predictable regulatory rules and cost-recovery mechanisms. 

“This programme is seen as vital to help meet the Transmission Development Plan’s targets and integrate renewable generation,” Havemann said.

Eskom has ambitious plans to expand South Africa’s electricity grid by installing 14,000 kilometres of transmission lines over the next decade, with this project set to cost R440 billion.

This grid expansion is critical for establishing a competitive electricity market, as more generators need to connect to the grid, requiring considerably more capacity than South Africa’s current system allows.

However, Havemann warned that the NTSCA’s current structure could significantly impact its ability to raise funding for ITPs.

He explained that, since the NTCSA remains a subsidiary of Eskom rather than a fully independent entity, it does not yet have a standalone balance sheet strength and credit profile.

Having its own balance sheet and credit profile often supports easier access to capital markets or private financing. 

In addition, Havemann pointed out that investors and lenders typically look for clear legal separation, strong governance, and independent financials when evaluating project finance opportunities.

Therefore, the current structure may make it more difficult for the NTCSA to secure long-term, non-sovereign financing on favourable terms, and even more challenging to obtain a guarantee from the new World Bank Credit Guarantee Vehicle.  

“This could, in turn, affect how quickly and cheaply capital can be mobilised for large transmission infrastructure deliveries under the ITP programme,” he warned.