Question NW676 to the Minister of Public Enterprises

Reply:

A

1. The restructuring of Eskom into three businesses in line with the President pronouncements is continuing with critical milestones achieved to date. The Eskom Road map envisaged that, the Transmission Company will be the first to be separated from the Eskom Holdings.

National Transmission Company of South Africa (NTCSA) was established as a wholly owned subsidiary of Eskom Holdings. Subsequently, the National Energy Regulator of South Africa (NERSA) approved and issued licenses to the NTCSA for operating, trading as well as importing and exporting electricity.

The Eskom Board appointed the NTCSA Board of Directors in January 2024. The enactment of the Electricity Regulation Act (ERA) into law is a critical milestone to provide the NTCSA with the transitional arrangement and assigned the duties, powers and functions of the Transmission System Operator (TSO) for a period of five years. In addition, the ERA will create a competitive wholesale electricity market. The ERA is going through Parliamentary approval processes. The National Energy Regulator of South Africa (NERSA) has approved Eskom’s application for a transfer of its powers and duties related to Section 34 Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) to the National Transmission Company South Africa (NTCSA).

The National Electricity Distribution Company of South Africa SOC Ltd (NEDCSA), was registered during the 2023 financial year. The Minister of Public Enterprises and the Minister of Finance granted approval of the PFMA application in terms of section 54(2)(a) and 54(2)(d) on 7 August 2023 for the transfer of the distribution business to NEDCSA. The NEDCSA merger agreement will be signed once all lenders to Eskom Transmission have given consent and the NTCSA is operationalized. Thereafter the NEDCSA will submit a Distribution license application to NERSA.

The Generation Division was functionally separated in March 2021. An internal Divisional Generation board was appointed and ring-fenced financials and reporting are in place. The establishment of Generation as a wholly owned subsidiary of Eskom Holdings will be completed following the establishment of the NewCo.

2. The restructuring of Eskom into three businesses is a complex process characterised by many dependencies both internal and external of Eskom. Most dependencies have been dealt with and Eskom is finalising the completion of critical suspensive conditions to operationalise the NTCSA. Lessons learned in the restructuring of the NTCSA will be utilised in the restructuring of both the Distribution and Generation subsidiaries.

B) The completion of the restructuring process will take time given the complexity and challenges encountered when executing the various activities. Although there are timelines for completing the process, there has been deviation and new timelines established on the back of unforeseen complexities in executing the restructuring process. However, the Board and new management team have been directed to seize every opportunity to speed up processes.