Unbundling Eskom will lead to cheaper power: Gordhan
Public Enterprises Minister Pravin Gordhan says Eskom’s structure is unsustainable and the governments needs to provide reliable energy to ensure economic growth.
Gordhan has confirmed plans to unbundle the state-owned power utility Eskom into three subsidiaries, namely generation, transmission and distribution.
The minister unveiled the long-awaited roadmap to rescue the struggling utility in Pretoria on Tuesday.
“We have to reliable source of energy for South Africans, whether they are in business or in households or students who are studying for their exams,” said Gordhan.
The minister said the paper aims to provide a roadmap to running effective operations at the embattled state-owned power utility.
Gordhan explained that the transmission and generation units will operate as subsidiaries under Eskom Holdings.
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Transmission will be responsible for conducting electricity from power stations to where it’s required, such as municipalities.
“Firstly, it’s looking after this infrastructure in transmission, secondly it’s a systems operator - this is the team that decides how much of power is demanded at any point in time and how much of power is available from the different Generation sources that energy is produced in,” Gordhan said.
The transmission subsidiary will have a buying function.
This will allow it to decide how much power it wants to buy from Eskom Generation or from private power producers.
The minister hopes the separation of transmission will be complete by the end of March next year.
Gordhan says Eskom’s generation acts as a monopoly, thus leading to a lack of competition and high cost of power.
The government and the power utility are also exploring the possibility of creating three clusters of coal power plants within Eskom’s generation unit, with each cluster acting as a business and producing power as cost-effectively as possible.
“More importantly, this will set up internal competition within the Eskom-owned generating facilities that we actually have at different power stations,” Gordhan said.
A new Eskom CEO and an interim board for the transmission subsidiary will hopefully be announced next week.