All systems go for Eskom transmission arm to become a separate company

The separation of Eskom into generation, distribution and transmission companies is moving ahead.

“Eskom and the National Transmission Company of South Africa (NTCSA) have satisfied all the requirements necessary to effect the merger and the operationalisation of the NTCSA,” the Department of Public Enterprises said in a statement on Thursday. 

“The NTCSA is now on course to be a duly constituted separate, distinct, and wholly owned subsidiary of Eskom Holdings.”

The unbundling of Eskom – in the face of union opposition – is seen as crucial for addressing the power shortages and rolling blackouts that are the biggest constraint to economic growth and investment in Africa’s most industrialised economy.

It is also seen as a necessary step to restore solvency and financial viability to South Africa’s debt-burdened, state-run power system. 

The Department of Public Works said the “... primary anticipated benefits of the legal separation of the Transmission division from Eskom” include: “Improved business performance through the focused attention of the NTCSA executives on transmission-related matters.”

This in turn is projected to increase “lender appetite” as the Treasury shuts the taps to SOEs while boosting the confidence of independent power producers “... of fair treatment in a future competitive electricity market”.

The conditions that were met pointedly include consent from lenders and creditors as well as approvals for electricity licences and other regulatory requirements by the National Energy Regulator of South Africa.

“A critical step ahead is the fulfilment of the Companies Act requirements, and it is anticipated that the NTCSA will commence trade about two months from the completion of these requirements,” the department said.

“Once all assets, systems and employees have been transferred to the NTCSA, and trade commences, the NTCSA will be a wholly-owned Eskom Holdings subsidiary.”

The ball is now rolling and Eskom as we know it will never be the same.

The ultimate goal is an end to the power cuts and relief from the strain on strapped government coffers. DM