Eskom CEO Andre de Ruyter told lawmakers on May 6 that “good progress” had been made on the “divisionalisation”, under Eskom Holdings, of the utility’s generation, transmission and distribution businesses, with separate boards and MDs having been appointed for each unit.
He also indicated, however, that full legal separation of the businesses is only expected during 2023 as part of “phase 2” of the roadmap to legal unbundling.
During a virtual joint meeting of the parliamentary and standing committees on public enterprises, De Ruyter reported that the boards of all three divisions had already met and the appointments of the boards and the MDs had been achieved at no additional cost to the utility, as candidates had been appointed internally.
By the end of March, divisional “re-linking” had been completed, involving the redeployment of staff from head office functions to the various businesses.
“I think the business focus is starting to take hold and my colleagues are coming to grips with the necessity of managing an income statement in a very active and very positive way,” he said, reporting that a new energy and a new focus on the bottom line was starting to take hold.
This greater focus, De Ruyter averred, would eventually lead to a lean and efficient Eskom, with a reduced and optimised cost base.
“At this point in time, we are still developing a methodology for allocating an appropriate amount of debt to each of the divisions – that, of course, is one of the major challenges that Eskom faces, the R450-billion-worth of debt.”
De Ruyter went on to assert that Eskom was “on track to enable, in the fullness of time, the legal separation of the three divisions of Eskom in accordance with the roadmap for a restructured electricity industry as published by the Department of Public Enterprises (DPE)”.
However, the slide deck displayed during his presentation, indicated that the programme to legally separate the “three subsidiaries” would be completed only in May 2023, with phase 2 of the roadmap starting at the end of 2021 and functional separation of the three units scheduled for 2022.
For the coming two years, phase 1, or the divisionalisation of the three units, would be implemented in parallel to the policy, legal and legislative preparations for full legal separation.
The DPE’s ‘Roadmap for Eskom in a Reformed Electricity Supply Industry’, published in October, also outlined a multiyear process for unbundling, but envisaged a far shorter timeframe, especially for the establishment of a new Transmission Entity (TE).
The DPE paper anticipated that the TE would be functionally separated from the other two units by the end of March 2020 and signalled that full legal separation was anticipated in 2021.