‘New Eskom’ here soon

The Department of Public Enterprises (DPE) promised that the “new Eskom” – under a new holding company dubbed NewCo – is around the corner.

The DPE told Parliament it is making good progress unbundling Eskom into three separate companies – alongside a new holding company to oversee them.

Under the proposed structure of the new Eskom, 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)

On Tuesday, the DPE told the portfolio committee on public enterprises that the most progress has been seen with NTCSA.

The department said the legal separation of the transmission company into a subsidiary is now at an advanced stage.

The NTCSA was incorporated in 2021, and the necessary licence applications to energy regulator Nersa have been made.

In July 2023, Nersa approved the licence to operate the transmission system within the boundaries of South Africa. However, this excluded the trading and import and export applications.

Eskom plans to commence the trading of the transmission company by November 2023. However, this is contingent on the approval of the trading licence from Nersa.

“The designation of the Transmission Entity as a buyer of energy from Independent Power Producers is at an advanced stage,” the DPE said.

“The application for the designation of the NTCSA as a buyer has been approved by the Department of Mineral Resources and Energy and is with Nersa for consideration.”

The appointment of the NTCSA board is also underway, and amendments to the Electricity Regulation Act are with Parliament for approval.

The labour restructuring processes and consultations are ongoing, and other matters and approvals are being finalised.

The department said transferring assets, people, and systems to the new transmission company should start in September.

Progress on restructuring the NEDCSA is much slower.

The functional separation was completed in March 2021, and the NEDCSA was registered with the Companies and Intellectual Property Commission (CIPC) in October 2022.

The next step is for Eskom to apply for a distribution licence to Nersa and engage lenders seeking consent for a legal separation of the subsidiary.

A vital part of the process is engaging with the National Treasury over municipal debt – now approaching R64 billion – to ensure the new company can be financially sustainable.

The minister still needs to appoint a permanent board, and management needs to deal with other matters, such as the transfer of staff, systems, and assets.

Eskom restructuring timelines

The image below shows the Eskom restructuring timelines and establishing NewCo to oversee these operations.

Source: BusinessTech