Eskom’s restructuring would not be able to happen in the set time frame, the Department of Public Enterprises (DPE) told Parliament's portfolio committee on enterprises yesterday.
The team, led by acting director-general Nadia Valley said approval of the split has been delayed as today, August 31, was the deadline for Eskom to finalise the financial conventions but was unlikely as lenders had not given their approval.
This was due to numerous challenges such as: concerns by Eskom's lenders over the utility's more than R450bn debt; proper licensing from the energy regulator; finalising of the Electricity Regulation Amendment Bill (ERA) and the legal wrangle over the splitting of Eskom into three entities.
Donald Nkadimeng, DPE chief director, said when the roadmap for the restructuring was envisaged, there were issues beyond Eskom's control, chief of which was the lenders' approval of the debt restructuring.
He said among the concern from lenders was how Eskom would deal with the debt and how the utility proposed splitting the debt among the envisaged transmission, generation and distribution companies. Eskom Holdings would still be ultimately responsible for the debt.
"You need to get legal approval from the lenders of the entity as part and parcel of the loan conventions for loaning money to Eskom. The anticipation was that the legal concern from the lenders would be obtained by the end of August, which is just a day away. It doesn't look like it will come but anything can happen," Nkadimeng said.
He said the lenders were still to obtain approval from their credit committees, which would make a decision and revert to Eskom as this was a critical prerequisite which is outside Eskom's control.
Meanwhile, MPs in Khaya Magaxa's committee expressed concern that it was becoming increasingly unlikely that the ERA Bill would be finalised by the end of 2023, or even by the end of this parliamentary term in mid 2024, given the legislative backlog, the parliamentary programme and the lengthy process needed to finalise the bill.
The ERA Bill is a critical piece of legislation that will establish a competitive electricity trading market, with multiple electricity generators to compete with Eskom.
Deputy Public Enterprises Minister Obed Bapela told Parliament there was no lack of political will to enact the ERA Bill, but that it still had to go through all the processes, including debate by Parliament, which was now unlikely as political players were focused on the upcoming elections in 2024.
Nkadimeng said though it was critical that Eskom acquired a transmission licence for the new company, the hurdle still to be jumped over was that the National Energy Regulator of South Africa (Nersa) had granted a licence in July 2021, which did not cover all the aspects of the new subsidiary and Eskom had to reapply for two other components that has not been granted yet.
“Eskom is vertically integrated and the licence was for Eskom Holdings. Though Transmission was established as a subsidiary of the holding company, it still needed to apply for a separate licence as a separate entity. The first licence did not cover all three activities needed. The legal separation will be completed once it starts as a transmission operator. However, with finalisation of the ERA Bill it will be able to operate Transmission company will only start operating the. It needs that and the lenders' concern," he pointed out.
Valley told the committee that Eskom's performance, particularly in its Energy Availability Factor (EAF), though improving, was still below targets to sufficiently supply power without the need for load shedding.
Valley said year-on-year the EAF was at 54%, lower than the June improvement to 58% though the 70% highpoint was still far away and targeted to be achieved by the first quarter of 2025.
The main reason's for the lapse were problems with Kusile and Medupi which had to be ramped up to achieve at least 6 000MW by March 2025.
MP Sibusiso Gumede voiced concern about the Presidential Crisis Committee's capacity to exercise oversight over all the boards of directors that had to be established for Eskom, including those of the three upcoming separate units.
Valley said the question of the Presidential Crises Committee needed the office of President Cyril Ramaphosa to answer.