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Godongwana provided PFMA consent for unbundling of Eskom’s distribution unit in 2022

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13th August 2023

By: Terence Creamer

Creamer Media Editor

     

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Government has again moved to dismiss suggestions that the unbundling of the Eskom generation, transmission and distribution businesses into three separate entities can be regarded as privatisation, noting that it is in line with a long-standing policy as well as a restructuring plan for Eskom approved by Cabinet in 2019.

“We are not selling anything,” the Presidency’s Rudi Dicks stressed at a regular briefing on the implementation of the Energy Action Plan, hosted weekly by Electricity Minister Dr Kgosientsho Ramokgopa.

The unbundling was first outlined in the Energy White Paper of 1998 and implementation was initiated following the publication of the ‘Eskom Roadmap’ in October 2019.

However, a recent letter sent by Public Enterprises Minister Pravin Gordhan to the Eskom board regarding the restructuring of the distribution company, and including the words “approval for sale”, sparked speculation that the business was being privatised.

Gordhan subsequently clarified that the business would remain “100% owned by the State” and reported that the letter was to provide his consent, in line with a requirement of the Public Finance Management Act (PFMA), for the transfer of assets from the Eskom Holding company to the newly established distribution company.

Speaking at the same weekly briefing, Eskom distribution group executive Monde Bala noted that Finance Minister Enoch Godongwana had provided his PFMA-required consent in mid-2022 and that Gordhan’s conditional consent had followed only recently as the Public Enterprises Minister had some issues he wanted clarified before doing likewise.

Bala said the next steps in the unbundling related to securing lender consent and to ensuring that the employees who would be transferred to the distribution business were fully consulted and “taken along”.

“The process of the distribution unbundling started with the announcement of the Eskom Roadmap in 2019, it did not start with the publication of the letter that we saw last week,” Bala said.

“There are still quite a number of steps to follow,” he added, noting that the implementation process had been under way for one-and-a-half years.

Dicks indicated that the respective separations of the generation and transmission entities were also advancing, with the National Transmission Company South Africa having received one of three licences from the National Energy Regulator of South Africa required for its operationalisation.

He expressed the hope that the other two licences would be approved soon.

Edited by Creamer Media Reporter

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