Eskom has welcomed President Cyril Ramaphosa’s green light on Phase I work of the Presidency’s Eskom Restructuring Task Team (ERTT), which sets out the framework for establishing a fully independent state-owned Transmission System Operator (TSO).
“Eskom welcomes President Cyril Ramaphosa's statement on the Phase I Report prepared by the Eskom Restructuring Task Team (ERTT) and supports the delivery of the government policy to establish an independent, state-owned Transmission System Operator (TSO),” the power utility said in a statement on Monday.
President Ramaphosa endorsed the landmark report by the ERTT, which sets the stage for a restructuring of the electricity sector to “create competition, unlock investment, reduce electricity prices and ensure energy security for sustained economic growth and job creation.”
In its statement, the power utility said it noted the emphasis in the ERTT’s Phase I Report that the establishment of the TSO should be implemented in a manner that addresses lender requirements, avoids defaults, and ensures that Eskom is not placed in a worse financial position and appropriately considers shareholder rights and interests.
These considerations, said the utility, are important to maintaining its financial sustainability and supporting a stable and orderly transition as the reform process progresses. This principle is a key enabler of a competitive electricity market that can support reliable, cost-effective electricity supply, strengthen energy security, attract investment, and contribute to South Africa’s economic growth, while reducing the risk of market failure.
“The Eskom Board shares President Ramaphosa’s vision of an independent Transmission System Operator that will own the transmission assets at the appropriate point in the future. Equally, the Board has a clear fiduciary responsibility to ensure that Eskom remains financially sustainable so that energy security can continue to power South Africa’s growth.
"It is precisely for these reasons that we fully support the pragmatic approach of treating electricity sector reforms as a carefully sequenced process with clear stage gates,” said Eskom Board Chairman Mteto Nyati.
Nyati added that as Phase II of the reform process commences, it is important that the implementation process safeguards Eskom's financial sustainability and appropriately addresses lender requirements, financing arrangements and contractual obligations.
“The establishment of an independent TSO is a material event for Eskom's lenders and will require careful engagement as the implementation pathway is developed. Successful reform and a financially sustainable Eskom are complementary objectives that will help support a stable, sustainable and investment-ready electricity,” he said.
Eskom also welcomed the ERTT's proposal to establish a dedicated workstream to develop solutions to municipal debt.
“Addressing municipal arrear debt, which has reached R119 billion, remains critical to Eskom's long-term financial sustainability and its ability to meet existing debt obligations. Progress in this area will be an important consideration in developing a sustainable implementation pathway for a fully independent TSO. Eskom, therefore, further welcomes the proposal to establish a focused programme of work to address this challenge,” Nyati explained.
In his statement on Friday, President Ramaphosa said the report shows how government can ensure that the architecture of the electricity sector can change as the sector continues to evolve, creating the foundation for South Africa’s growth.
The report includes recommendations that:
• show that the restructuring is feasible, in line with international best practice, and can be done in a manner that does not compromise Eskom’s financial sustainability.
• highlight that the growth in municipal arrear debt to Eskom needs to be addressed because of the threat it poses to Eskom and the broader electricity sector.
• identify several actions that can be taken immediately to enable the restructuring.
Meanwhile, the power utility said it remains committed to supporting South Africa's electricity market reforms while ensuring that the implementation process strengthens the long-term sustainability of the utility and the broader electricity sector.
“Eskom will continue to engage with affected stakeholders and provide updates, as appropriate, as the reform process progresses,” it said. -SAnews.gov.za
