Unbundling of Eskom is on track, says De Ruyter
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JOHANNESBURG - ESKOM chief executive Andre de Ruyter yesterday again dismissed suggestions that the unbundling process under way at the power utility would make way for the privatisation of the electricity supplier.
Appearing before the Select Committee on Public Enterprises, De Ruyter assured Parliament that the unbundling of Eskom into three separate units was on track, because the functional separation had been completed.
De Ruyter said that at this point in time there was no intention for privatisation to be reflected in the way in which Eskom was approaching the restructuring process.
“We anticipate that all three of the divisions will be wholly owned entities under Eskom SOC Ltd,” De Ruyter said. “So there is no provision made in our internal restructuring plans for any private sector participation by means of equity in any of the three divisions.”
De Ruyter said the restructuring process presented Eskom with opportunities to optimise the cost of its debt.
Eskom managed to reduce its debt by R83 billion in the 2021/21 financial year, from R484bn to R401bn, because of the repayment of maturing debt and changes in the exchange rate.
De Ruyter said the generation unit would carry the lion’s share of the power utility’s debt burden after the unbundling had been completed.
He said the transmission business would be used to raise more funding, because it was highly regarded by lenders due to having a very stable cash flow and a cluster of good assets.
“We will apportion roughly at least half of Eskom debt to our generation business, and the balance in equal tranches to both transmission and distribution,” he said. “We, therefore, would anticipate that the debt capacity of the transmission business would be very attractive to lenders and would be of a lower risk than the generation business.”
Eskom’s presentation to Parliament showed that the utility had already completed the functional separation of the generation, transmission and distribution units. De Ruyter said the utility was now seized with expediting the legal separation as they raced toward the end-of-year deadline.
The legal separation of the transmission unit was expected to be completed by December 31 this year, as Eskom has prioritised this unit. The legal separation of generation and distribution units would be completed 12 months later, by the end of December 2022.
“The critical element of our restructuring is moving towards legal separation of each of the three units. It is absolutely crucial that we get this right,” De Ruyter said.
“We are forging ahead with as much speed as we can muster. However, we are also heavily dependent on other policy makers and regulatory decisions in order to meet the timelines set by the Department of Public Enterprises.”
De Ruyter also assured Parliament that the restructuring process would not result in mass job losses at the utility, saying Eskom had engaged workers’ unions at length about this.