Eskom’s chairman says the Company won’t be privatized

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Eskom is not being privatized as a result of South African electrical industry changes. The government will still hold all of the company’s assets even after it is unbundled.

The utility’s chair, Mteto Nyati, informed CNBC Africa that the private sector will only be permitted to take part in the creation of electricity and the expansion of the system. It won’t assume control of these duties.

For almost a year, the Department of Public Enterprises (DPE) has assured South Africans that the “new Eskom,” operating under a brand-new holding company called NewCo, is on the horizon.

Since the formal conversion of the transmission firm into a subsidiary is now progressing, the NTCSA has seen the most advancement.

The NTCSA was incorporated in 2021, and Nersa, the energy regulator, has received the required license applications.

The license to run the transmission system inside South Africa’s borders was granted by Nersa in July 2023. The apps for trading, import, and export were not included in this, though.
In August of last year, the DPE reported to Parliament that it was well on its way to dismantling Eskom into three distinct businesses, with a new holding company in place to manage them.

Three autonomous subsidiaries of a holding firm named NewCo will operate under the new Eskom’s proposed organizational structure:

Eskom Holdings Generation (the current Eskom generation)
Transmission: South Africa’s National Transmission Company (NTCSA)
Distribution: South Africa’s National Electricity Distribution Company (NEDCSA)

It is significant to remember that the establishment of an independent transmission business started 23 years prior to the implementation of this reform.
Despite worries that the private sector may seize some of Eskom’s assets and outbid its generation division, Nyati is convinced that this will not lead to the utility being privatized.

“There will be private participation, but there won’t be privatization. For instance, we would ask the private sector for support when we build new transmission lines if we lack the necessary funds,” he stated.

Prior estimates put the utility’s need to build enough transmission infrastructure to connect new generation facilities to the grid at R350 billion over the course of the next ten years.

From our own operations, we are unable to finance that,” he remarked. The develop, operate, and transfer strategies that have been employed to construct toll highways around the nation, he continued, were models that the board was thinking about utilizing.

The infrastructure would be constructed and run by the private sector for a certain amount of time, possibly as long as 20 years, under this approach. It would then be returned to the government agency that originally purchased it.

Despite Nyati’s guarantees, there are concerns that Eskom’s consumers are gradually moving off the grid and finding other electricity sources, raising the possibility that the company is being quietly privatized.

These consumers will switch to more affordable renewable energy sources, leaving Eskom with a larger proportion of unpaid clients.

Eskom is raising electricity prices dramatically in order to offset the lost revenue. More paying clients install solar PV as a result in order to reduce expenses.

This decreasing trend is getting worse, particularly as South African homes and companies try to lessen the effects of load shedding.
This decreasing trend is getting worse, particularly as South African homes and companies try to lessen the effects of load shedding.

According to Eskom’s estimates, rooftop solar will reach 5,203 MW by the end of December 2023, up from 2,586 MW at the end of 2022.

It was previously stated that on sunny days, behind-the-meter solar arrays had assisted in preventing higher stages of load shedding.

As a result, solar PV is assisting the nation in avoiding more severe load shedding. But Eskom will lose out on money as a result.

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