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Eskom functional separation delayed by transmission licence

Eskom chief executive André de Ruyter says the functional separation of Eskom into three entities – generation, transmission, distribution – has been achieved, with support staff now relinked to operations. File photo.

Eskom chief executive André de Ruyter says the functional separation of Eskom into three entities – generation, transmission, distribution – has been achieved, with support staff now relinked to operations. File photo.

Published Dec 17, 2021

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ESKOM could miss the December 31 deadline to operationalise its new transmission company in spite of having achieved functional separation of its business.

The power utility said on Wednesday, that certain dependencies outside of its control might delay the process which is expected to open up the space to allow the participation of more independent power producers.

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Eskom chief executive André de Ruyter said the functional separation of Eskom into three entities – generation, transmission, distribution – had been achieved, with support staff now relinked to operations.

De Ruyter said divisional boards had been put in place, while a new legal entity – the National Transmission South Africa – had also been registered.

However, he said the utility was still waiting for a transmission licence to be granted by the energy regulator, as well as lender consent and the amendment of the Electricity Regulation Act, 2006, to support the ultimate industry structure.

“We expect to have this transmission (company) running during the 2022 calendar year. Hopefully, we can bring that forward. But we still require a transmission licence, first of all, to be cancelled,” De Ruyter said.

“The transmission we have now is currently in the hands of Eskom SOC Holdings, so that needs to be cancelled and then a new licence needs to be issued.

“We are in discussion with both the Department of Mineral Resources and Energy and Nersa. We are engaging with our lender to ensure that they are in the loop and on board.

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“This is one of the most complex corporate restructuring exercises that our advisers have worked on.”

Meanwhile, Eskom warned of an increased risk of load shedding for a greater part of next year due to continuing decline in generation performance.

De Ruyter said the modifications being applied at Kusile Unit 2 and 3 would cost the country at least a whole unit’s capacity for half a year.

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The utility’s only nuclear power station, Koeberg, will be also operating at half capacity for 10 months next year, having switched off 920MW of capacity.

Unit 2 of the Koeberg Nuclear Power Station will undergo a long-term outage of about five months starting in January 2022 while Unit 1 will also be put on an outage for modifications and scheduled maintenance during the last quarter of the calendar year.

Eskom’s generation division’s performance has remained disappointing due to an explosion in Medupi and a generator transformer fire in Kendal, which led to 1 360MW lost to the grid and contributing to 21 days of load shedding.

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These two incidents also contributed to Eskom’s deteriorating energy availability factor which stood at 65.27 percent on 30 September, compared to the target of 70 percent.

As a result, Eskom increased its diesel spend on its open cycle gas turbines to R4.5 billion in the six months ended 30 September, from R2.6bn spent in the same period last year.

“While we accept that this high diesel usage is neither desirable nor sustainable, we are cognisant of the fact that load shedding costs the country way more,” De Ruyter said.

“We are pulling out all the stops to improve our performance despite numerous challenges.”

siphelele.d[email protected]

BUSINESS REPORT ONLINE

Related Topics:

energy industryEskom

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