Eskom to spin off transmission business by end of the year - CEO
State power firm Eskom aims to complete the legal separation of its transmission unit by the end of 2021, its Chief Executive Andre de Ruyter said on Monday, with the generation and distribution units following in 2022.
President Cyril Ramaphosa announced a plan to divide the cash-strapped utility into three units in 2019, but the process has stalled and nationwide blackouts have continued, damaging the already fragile economy.
The plan to split the company, which supplies over 90% of South Africa's electricity but is straining against the burden of heavy debts and failing coal-fired plants, is designed to smooth the firm's access to capital markets.
Eskom has debt net debt of between R460 billion and R485 billion, and is likely to record another "substantial loss" in 2021, de Ruyter said in a live address on YouTube.
Eskom is pinning its turnaround on the new structure and increased reliance on renewable energy.
"Why do we prioritise transmission? It's to enable us to demonstrate to private investors, in generation in particular, that their bids will be fairly adjudicated compared to legacy Eskom generation," said de Ruyter.
Some investors and analysts have said the separation could trigger a default under Eskom's current loan agreements as it involves the transfer a number of assets and liabilities.
Each of the three divisions were busy finalising their balance sheets, de Ruyter said. "The underlying issue is how much debt each of the divisions can and should be carrying."
"If all the actors in this ballet play their role and give us those approvals as quickly as is required, we should have the ITSMO (independent transmission system and market operator) in place within the year."
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