Regulatory hurdles may delay legal separation of Eskom's transmission business - De Ruyter

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Eskom CEO André De Ruyter warns that the legal separation date for the transmission entity could be at risk.
Eskom CEO André De Ruyter warns that the legal separation date for the transmission entity could be at risk.
David McNew / Staff / Getty
  • The legal separation of Eskom's transmission entity is due for completion by December 2021.
  • While the power utility has done everything on its side to meet the target date, it also depends on legislative amendments and regulatory decisions, says Eskom CEO André De Ruyter.
  • De Ruyter says it will be "regrettable" if regulatory interventions are not in place to achieve the legal separation.


While Eskom has done everything on its side to achieve the legal separation of its transmission entity by December 2021, the matter also depends on getting legislative amendments and regulatory decisions timeously, according to CEO André De Ruyter.

The group chief executive made the remarks during a pre-recorded interview with Enlit Africa, which was published on Tuesday. De Ruyter was highlighting some progress points of the power utility's five-point plan. Among these was the legal separation of the generation, distribution and transmission entities.

The divisional boards of each of the three entities has been established - as well as their functional separation. Eskom previously told Parliament the separation would cost R500 million.

The separation of the transmission entity is first in line and is subject to approval for a transmission licence from the National Energy Regulator of South Africa (Nersa), as well as lenders, Fin24 previously reported.

De Ruyter said that Eskom has made progress with the legal separation for transmission. "We have done everything we can to meet the target date of legally separating transmission by December 2021," he said.

But the legislative amendments and regulatory decisions that are required will depend on "choreography" between different departments such as Nersa, the Department of Mineral Resources and Energy, the Department of Public Enterprises, National Treasury and Eskom itself, De Ruyter explained.

"From our perspective, we are driving the process. But the date can be at risk if we do not get the regulatory interventions in time for us to achieve the legal separation," he said.

De Ruyter added that it will be "regrettable" if it is not achieved.

Eskom's other prioritises include reducing its some R400 billion debt burden to a more manageable range of between R150 billion and R200 billion.

While Eskom has been a beneficiary of equity injections from National Treasury, there is still more work to be done, he said. There is not a single silver bullet to solve the debt problem, he added. Eskom is considering multiple interventions such as optimising its working capital, addressing municipal debt levels, or converting some debt to equity. Finding a debt solution has been "slower" than Eskom would have liked, he said.

Eskom is also making headway in terms of encouraging a "high performance" culture.

"We are holding people accountable," said De Ruyter.

Eskom has made leadership changes at power stations including coal-fired Tutuka, which was in a "shocking state" following years of neglected maintenance, according to Eskom executives who briefed the media on the state of the system on Monday. A number of key people at the station have been suspended and arrests will be made.

De Ruyter added that people have been caught for engaging in corrupt activities.

"Have we won the war as yet? No, but more and more the signal is getting out to those miscreants who are seeking to enrich themselves at the expense of South Africa and Eskom that crime does not pay and we will get them in the end," he said.

De Ruyter added that Eskom would like to see greater support from law enforcement authorities to see more people in "orange overalls".

So far Eskom has been pursuing civil cases to recover monies.

Last year the power utility managed to recover R1.56 billion from contractor ABB South Africa. This was linked to overpayments to the contractor for the construction of Kusile power station.

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