Unbundling Eskom ‘is not a path to privatisation’ – Ramaphosa

During his State of the Nation Address (Sona) debate reply today, President Cyril Ramaphosa said the decision to unbundle Eskom into three state-owned entities – for generation, transmission and distribution – “is not a path to privatisation”.

The president further cautioned against “reckless claims and political posturing” when it comes to the crisis at the power utility.

Following the president’s announcement during the Sona that the power utility would be unbundled into three state-owned entities, concerns were raised that this would favour business interests over the needs of the South African people.

Labour unions are also concerned that Eskom is heading towards privatisation, which could result in the mass shedding of jobs at the utility.

“There are sound, valid and compelling reasons to effect this change we are talking about. It is about looking at the business model of Eskom and see what will work best.

“It is not a path to privatisation, I repeat, it is not a path to privatisation,” Ramaphosa said in parliament today.

The president said restructuring Eskom would scale down the entity which, he said, in its current state has been “termed too big” and so places the government in the position “where all our eggs are in one basket”.

“The breakdown of six units immediately takes out 4000 megawatts and has an overarching impact on not only the economy of our country but the lives of our people,” the president said.

Ramaphosa said the restructuring will align the utility to international trends in the electricity sector “where the vertically integrated electricity utilities have been broken up to enable better regulatory oversight through a single buyer model, increase competition and making sure that the risks are minimised”.

He further said the process is intended to ensure the country has reliable electricity supply.

The president said “cost cutting” at the utility does not equate retrenchments.

The president said restructuring the entity will:

•  Improve the benchmarking of performance, increase transparency, decentralise management and allow better oversight of Eskom’s different functions.
• It will simplify the management of what has become a complex and unwieldy organisation.
• It will enable funders to better assess risk and opportunity, and open space for new investment in the generation capacity we urgently need.
• Separating Eskom’s divisions into separate units will allow each entity to source funding on its own merits.

“I have constituted a Special Cabinet Committee on Eskom which will be led by the Deputy President consisting Minister of Public Enterprises, Energy, Finance, Transport, Intelligence and Police to be seized with the matter of Eskom on a daily basis and provide me with reports daily on what actions need to be taken to secure energy supply.”

(Compiled by Makhosandile Zulu)

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