Recently retired Absa CEO Maria Ramos may be tasked with heading Eskom’s planned unbundling, according to Sunday Times.
Ramos is reportedly the favourite candidate in leading the upcoming process, which is bound to be tedious, complicated and challenging.
The embattled power utility received an emergency bailout through National Treasury earlier in April, but urgently needs further financial assistance.
According to a letter from Finance Minister Tito Mboweni to Speaker Baleka Mbete, and a report by the minister to Parliament, R5 billion was released to the troubled power utility after an expected instalment on a R2.5 US$loan from the China Development Bank was delayed.
The delay meant that Eskom was unable to meet obligations that became due at the end of March, Mboweni wrote. This meant invoking section 16 of the Public Finance Management Act to prevent Eskom defaulting.
Mboweni explained that the first tranche of financial relief for Eskom of R69 billion over three years announced in his national budget in February had not been available because Parliament rose ahead of the May elections before a special appropriations bill could be processed by the legislature.
This meant that these funds would likely only be paid over to the company between August and October this year.
Mboweni said the problem arose because Eskom was not able to draw down R7 billion from the China Development Bank loan because of “central bank exchange control requirements.” The money was expected on March 25 and it is not clear from his missive whether it has since been released.
The minister did, however, reveal that government had, in order to avert a crisis, asked the Corporation for Public Deposits to release R4.6 billion to tide Eskom over but the request was declined.
It then turned to Absa for R3 billion in bridging finance, against a government guarantee. The R5 billion released from the National Revenue Fund after section 16 of the PMFA was invoked, was used to refund this emergency loan.
In his budget statement in February, Mboweni had announced R23 billion in additional funding for Eskom annually for the next three years.
The unbundling is due to star in June, and will involve establishing a subsidiary of Eskom Holdings with an independent board. The new company would own Eskom’s entire transmission network and power stations.
The split was envisioned in government policy documents written 20 years ago, but was finally announced by President Cyril Ramaphosa in his state of the nation address earlier this month.
National Treasury noted in the budget documents earlier this year that the current vast, vertically integrated structure of Eskom means that a problem experienced in one part of the business threatened the entire company, and affected the energy stability of the whole country.
An unbundling would “mitigate the risk arising from an Eskom that is ‘too big to fail’ and limit financial contagion from underperforming parts of Eskom’s generation business, where most of the problems originate,” it said.
Additional reporting by African News Agency (ANA)
(Compiled by Nica Schreuder)