The establishment of an independent, state-owned Transmission System Operator (TSO) is central to government’s efforts to secure a reliable, affordable and sustainable electricity supply for all South Africans.
The restructuring of the power utility forms part of government reforms with the TSO remaining state-owned and in control of and own transmission assets and be responsible for operating the electricity market.
In July, President Cyril Ramaphosa endorsed the Phase I report of the Eskom Restructuring Task Team (ERTT), setting the stage for the restructuring – a move supported by Eskom.
“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,” Eskom Board Chairman Mteto Nyati said earlier this month.
Eskom noted that the TSO’s established 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.
“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 sector,” Mteto stated.
Financial stability
Mounting municipal arrear debt, which has reached at least R119 billion, presents a challenge to stabilising South Africa’s energy grid.
To tackle this challenge, the ERTT’s proposed the establishment of a dedicated workstream to develop solutions to municipal arrear debt.
“The ERTT has proposed that a working group develop a consolidated action plan, encompassing all initiatives aimed at arresting the growth in municipal arrears and identifying those to be scaled up and accelerated.
“Such initiatives include stronger enforcement of credit controls, rolling out smart meters and Distribution Agency Agreements [DAAs], and stricter license enforcement, as well as the continued implementation of the Municipal Debt Relief Programme, Metro Trading Services Reform and the Electricity Distribution Industry [EDI] Reform Roadmap,” the Presidency said in July.
Announcing the endorsement of the ERTT’s Phase I report of the restructuring, President Ramaphosa noted that he is “encouraged by the speed and diligence with which the task team has taken forward this important task”.
“The establishment of a fully independent transmission company is a critical reform which will support the introduction of a competitive electricity market and ensure a reliable, affordable and sustainable electricity supply to power the economy,” President Ramaphosa said. – SAnews.gov.za
