Time for Eskom to deliver on its promises

With Eskom making significant progress toward bringing load-shedding to a permanent end and finalising its reform programme, 2026 is the year it will have to move from preparation to implementation. 

Eskom’s performance throughout 2025 fundamentally reset South Africa’s electricity sector, with the load-shedding crisis of the past decade seemingly coming ot an end. 

However, while this is important for South Africa, the next step of implementing reforms to ensure they take practical effect is potentially much more significant. 

Experts from Webber Wentzel’s energy division explained that 2026 will test how well Eskom and the broader electricity sector begin to implement key reforms. 

As these reforms near theoretical finalisation, they have to begin taking practical effect over the next year for the South African energy sector to be ‘future fit’. 

The experts noted that some of this is beyond Eskom’s control, with the shift towards new generation technologies, particularly renewables, accelerating. These reforms have become crucial for a stable electricity supply in the future. 

Of all the reform programmes, the most important is the implementation of the Electricity Regulation Amendment Act, which came into effect on 1 January 2025. 

This marked the formal start of South Africa’s shift from a vertically integrated monopoly to a competitive, open-market electricity sector. 

The Act establishes the Transmission System Operator (TSO), which will be responsible for operating South Africa’s grid and act as the central purchasing authority. 

Webber Wentzel’s experts noted that this is the most significant structural reform since Eskom’s creation over 100 years ago, with it fundamentally reordering the electricity sector. 

The practical effects of this fundamental change should be felt in 2026. However, Eskom has had to meet with its creditors following changes to the unbundling process.

Eskom said it successfully engaged with these creditors during two investor calls on 2 February and 5 February.

The utility wants to keep its unbundled parts under the Eskom Holdings umbrella to avoid altering its debt obligations. However, this means that Eskom will retain immense influence over a supposedly independent operator meant to create a competitive market. 

This may delay the creation of a competitive electricity market, which will have a cooling effect on the private investment needed to avoid a return to load-shedding in the future, when Eskom decommissions some of its coal plants. 

Furthermore, it may result in the creation of an open electricity market with an operator that favours Eskom’s generation facilities over private alternatives, slowing investment in new generation capacity. 

Eskom the stumbling block

One of the major challenges in implementing the government’s energy reform programme is Eskom’s willingness to legally challenge it at various stages along the way. 

The utility naturally does not want to give up its highly lucrative monopoly on electricity generation in South Africa, which has gone unchallenged for over a century. 

Eskom’s ageing coal fleet and rising cost base, which translates into higher electricity prices, are also unlikely to be economically competitive against new generation technologies such as renewables. 

The utility has partially admitted this through the launch of Eskom Green, through which the utility aims to invest in its own renewable energy generation capacity to compete with private players. 

This should reduce Eskom’s electricity production costs, making it economically competitive and enabling it to compete on sustainability. 

While, in time, this should work in making Eskom competitive, the utility has, in the short term, sought to maintain its stranglehold on generation as much as possible. 

Webber Wentzel’s experts pointed to Eskom launching a judicial review to set aside five of the trading licenses Nersa granted to private players in late 2025. 

Nersa had granted a wave of new trading and import-export licences, signalling rapid liberalisation of the sector in line with the state’s reform programme. 

Eskom’s judicial review argued that Nersa was shaping national energy policy without clear trading rules or sufficient consultation, despite not raising objections to similar licences issued over the past decade. 

The utility said these new licences risked upending the existing distribution framework in the absence of defined rules and regulatory uncertainty. 

Following ministerial pressure and Nersa’s decision to accelerate the publication of trading rules, Eskom backtracked on its court action while participating in the rule-making process. 

Webber Wentzel’s experts said this highlighted deep tensions around market reform, Eskom’s future role in electricity trading and fears of customer “cherry-picking” by electricity traders. 

Eskom told Daily Investor that it has been clear and consistent in its public position, saying that:

• It supports the reform of South Africa’s electricity market.
• It welcomes competition.
• It remains committed to participating, alongside other traders, in the NERSA-led process to develop trading rules that enable a fair, transparent, and sustainable competitive marketplace.

However, the utility did not that there are some serious financial challenges with the unbundling of its various divisions.

“It should be noted that a scenario involving the immediate and full legal separation of transmission assets would require major financial intervention from the ultimate shareholder, the South African government,” the utility said.

This is due to the likely risk of cross-default in honouring existing lender commitments, as analysed by Eskom’s transaction advisers.

This estimate is based on approximately R400 billion in debt settlement that would become due, and about R100 billion required to purchase shares in the NTCSA for the asset transfer outside Eskom Holdings.