Eskom Holdings, the South African power utility struggling with debt of almost $30-billion, said it would take as long as three to five years to comply with government’s plan to split the company into three separate units.

President Cyril Ramaphosa said in February that the company would be divided into generation, transmission and distribution units to make it more manageable. The split is part of a rescue plan that also commits government to pay $8.4-billion over three years in bail-outs.

“Eskom ran out of cash and came close to complete collapse on multiple occasions in 2019,” Jabu Mabuza, the company’s interim executive chairperson and CEO, said in a presentation made in late August to the company’s top 500 managers. It was seen by Bloomberg. “Eskom’s importance to South Africa is the only reason the company still exists.”

The slideshow was confirmed by Lwanda Zingitwa, Mabuza’s chief of staff.

Eskom is seen as a risk to the country’s financial stability and could cost South Africa its last investment-grade rating. Expected subsidies over the coming years will drain money needed for other government projects, and the company’s inability to carry out sufficient maintenance on its fleet of 15 coal-fired power plants threatens to cause blackouts, which have in the past slashed economic growth.

Mabuza said that the impact of a collapse of Eskom, the debt of which makes up 17% of total sovereign debt, would cause the country to have its credit rating slashed to ‘junk’, prompting a depreciation of the rand and a sell-off of government bonds. The country would need to seek an international bail-out, he said.

Under the plan presented by Mabuza, South Africa’s second-biggest company by revenue after Sasol would split into the three units at an operating level in 12 to 18 months. The legal separation would occur in two to four years and the transmission unit would become a Standalone State-owned company within three to five years. Generation and distribution would remain under an Eskom holding company.

He also said that the company would cut annual costs by R33-billion over five years and was targeting annual earnings before income. taxes, depreciation and amortisation of R79.3-billion, compared with R31.6-billion for the year ended March 31.

It would also seek to develop more renewable power and raise its plant availability to generate power at any given time to an average of 78% rather than the below-70% it saw in the last fiscal year. Among the company’s woes was a 30% increase in operating expenditure over the last five years to R151-billiona year.

“The separation timelines are very long, requiring bail-outs in the interim,” said Peter Attard Montalto, head of capital markets research at Intellidex. “The fact generation will remain under Eskom holding would not be positive for competition.”

In a separate statement, the Department of Public Enterprises said about 200 technical and engineering staff would be deployed at power stations to ensure operational discipline as it tried to stabilise electricity supplies. The turnaround strategy had been explained to labor unions, the utility said last week.