Eskom to be split into three SOEs, Cyril Ramaphosa confirms in Sona
The president says this will be done ‘without burdening the fiscus with unmanageable debt’
Eskom will be remodelled and split into three state-owned entities dealing with generation, transmission and distribution, President Cyril Ramaphosa announced in his state of the nation address (Sona) on Thursday night.
The company will also get financial support from the government, the details of which will be announced in the budget in two weeks' time.
Ramaphosa said that this would be done “without burdening the fiscus with unmanageable debt”.
Eskom is deep in a financial and operational crisis, with a debt burden of R419bn, which it is unable to service from the revenue it earns. It is also straining to keep the lights on, with multiple breakdowns of its old plant due to neglected maintenance.
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“To ensure the credibility of the turnaround plan and to avoid a similar financial crisis in a few years’ time, Eskom will need to develop a new business model,” Ramaphosa said on Thursday night in Parliament.
The three entities will exist under Eskom Holdings, with each allocated its share of the costs of the business. It is anticipated, said Ramaphosa, that the split would enable Eskom to raise funding for its various operations from the funders in the market.
Of key importance to Eskom’s bond holders will be how the R419bn debt is apportioned between the three entities.
Ramaphosa did not provide any details on how this would be done.