Eskom to be split into three entities, Ramaphosa announces

A freight train leaves the Eskom power plant in Hendrina on February 22, 2018, after having discharged its load of coal. Picture: MARCO LONGARI / AFP

A freight train leaves the Eskom power plant in Hendrina on February 22, 2018, after having discharged its load of coal. Picture: MARCO LONGARI / AFP

President Cyril Ramaphosa on Thursday announced Eskom would be split into three separate entities as part of new business model the cash-strapped electricity utility would need to develop.

Speaking during the state of the nation address (Sona), Ramaphosa acknowledged Eskom was in crisis and posed a significant risk to the South African economy, requiring bold decisions that would not affect the country’s sovereign rating.

“To bring credibility to the turnaround and to position South Africa’s power sector for the future, we shall immediately embark on a process of establishing three separate entities – Generation, Transmission and Distribution – under Eskom Holdings,” said Ramaphosa.

“This business model needs to take into account the root causes of its current crisis and the profound international and local changes in the relative costs, and market penetration of energy resources, especially clean technologies.”

In the short term, Ramaphosa said the state-owned entity would need to reduce its costs, and raise revenue through tariff increases that are also affordable for South Africa.

Ramaphosa also hinted at another possible bailout for the struggling company.

“Government will support Eskom’s balance sheet, and the minister of finance will provide further details on this in the Budget Speech.”

– African News Agency (ANA)

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