Eskom Unbundling Explained 29 August 2019

Eskom is South Africa’s largest power utility; which plays a central role in the country’s economy, as it is responsible for 90% of the country’s electricity supply. It was designed as a vertically integrated business model and continues to function as such. It is currently grappling with a financial debt that has proven impossible to settle, and operational challenges which threatens the economy of South Africa in various ways. As an attempt to resolve these and other challenges faced by Eskom, the Government has come to a decision to restructure the utility. It was announced that Eskom will be separated into generation, transmission and distribution to increase efficiency and deal with the financial debt.

The CPLO hosted a roundtable discussion: Eskom Unbundling Explained, with an objective to provide a platform of engagement on the topic. The speakers were Ms Phakamile Hlubi representing Numsa; Mr Hilton Trollip representing civil society; and Ms Makgola Makololo representing the Department of Public Enterprises. Ms Hlubi explained that Numsa is against the unbundling of Eskom as they believe it is a gateway to privatisation, and this would excercebates the triple challenges of unemployment, inequality and poverty as we are already faced with as a country. She emphasised that Government has a responsibility to continuously find solutions that will make Eskom efficient and retain its mandate of serving the public interest. Mr Trollip mentioned that it is important that a clear distinction is made between the two concepts- ownership and governance. He emphasised that good governance would enable an efficient profitable business model for Eskom, either owned by the state or the private market. Ms Makololo explained the financial and operational challenges at Eskom, unpacking both the contributing and the underlying factors which led to the current crisis. Participants contributed their inputs to enrich the conversation from different perspectives as far as the matter is concerned.