Engineering News

Public Enterprises Minister Pravin Gordhan has criticised Eskom’s “elongated” restructuring timeframes and has called for greater urgency and drive from the utility in completing the remaining processes required to enable the independent grid company to begin trading.

Eskom has indicated that the National Transmission Company South Africa (NTCSA), the first of three subsidiaries under the yet-to-be-formed Eskom Holdings scheduled to be operationalised, will begin trading from the start of its new financial year on April 1.

The State-owned utility provided the updated timeframe to Engineering News after the Energy Regulator confirmed that it had approved the transfer of the remaining two licences from Eskom to NTCSA, which was regarded as a key milestone for ensuring its full operationalisation.

However, in a presentation to the Select Committee on Public Enterprises, the Department of Public Enterprises (DPE) indicated that government believed there was potential to expedite the process and for the NTCSA to begin trading on November 1 instead.

The restructuring was severely lagging the initial December 2021 deadline set for the legal separation of Eskom’s generation, transmission and distribution divisions.

“When we have reviewed the progress in recent times, we have brought to the attention of the board of Eskom that we believe that the timelines of the internal teams of Eskom are far too elongated.

“They seem to lack urgency and the necessary drive to complete as many processes as possible during this administration,” Gordhan told the committee during a virtual meeting.

He also stated that government was no longer referring to the restructuring under way at Eskom as “unbundling”, owing to the term’s association with sale or privatisation processes, stressing that all three subsidiaries would remain State owned.

DPE’s Donald Nkadimeng confirmed that a series of actions and approvals were still required before the NTCSA could begin trading, including:

• the appointment of an independent board, which was said to be close to approval;
• lender consent, which was initially anticipated by the end of August, but currently expected by the end of September;
• the transfer of servitudes from Eskom to NTCSA;
• the transfer of 2 000 staff members;
• a refinement of the Eskom memorandum of incorporation;
• The designation of the NTCSA as the buyer of electricity, which required the National Energy Regulator of South Africa’s (Nersa’s) concurrence with a Department of Mineral Resources and Energy determination in this regard;
• The conclusion of Eskom Holdings Generation as well as the independent power producer licences amendment to allow for NTCSA as the buyer of their electricity;
• the signing by National Treasury of a Government Support Framework Agreement with the NTCSA; and
• the completion of the lodging of the NTCSA with the Companies and Intellectual Property Commission.

Despite the extensive nature of outstanding conditions, Nkadimeng indicated November 1 as being the department’s “aspirational” timeline for the NTCSA to begin trading.

He also indicated that the DPE wanted the entire restructuring process to be completed by the end of March, including the operationalisation of the National Electricity Distribution Company of South Africa, which would also require licensing by Nersa, the separation of the Generation Division, and the establishment of a new holdings company, or Newco.

The departmental timelines, Nkadimeng confirmed, were not in line with Eskom’s internal timelines, but reflected the DPE’s view that the process could be expedited.

“Eskom provided their timelines, and we have since indicated to them that there is a need for them to review their timelines,” he said.