The government’s plan to unbundle Eskom into three separate companies focusing on generation, transmission and supply under a holding company, and sell old power stations, does nothing to solve the utility’s main problem. To understand that problem one needs to appreciate the existing electricity market design and government funding of state-owned companies.

In SA the electricity market design means power is generated, transmitted and distributed by a vertically integrated monopoly. Some municipalities are also monopoly electricity distributors, buying electricity from Eskom and selling it to households, with the attendant risk of causing a debtor management problem for Eskom.  ..

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