Reappointed Nyati links Eskom unbundling to board’s new top priority of electricity affordability

Eskom chairperson Dr Mteto Nyati, whose term has been extended by a further three years, says the board’s top priority has shifted from guaranteeing electricity stability to ensuring affordability.

In addition, he drew a direct link between that goal and moves under way to fully separate the National Transmission Company South Africa (NTCSA) from Eskom Holdings, while questioning the prevailing view that he and the board were opposed to such restructuring.

Speaking after Electricity and Energy Minister Dr Kgosientsho Ramokgopa confirmed that Cabinet had endorsed his reappointment as from November 1, Nyati said the board would now focus on implementing the ‘Eskom 2.0’ strategy outlined for it by its shareholder.

The strategy has multiple objectives, but places emphasis on the need for affordable electricity for both businesses and households and to facilitate government’s reindustrialisation vision.

“To make sure that we have energy that is affordable, you need to also demonstrate that you have embraced the liberalisation of the market, because competition is actually a healthy thing to drive down the costs.

“So this whole transition, this unbundling that we are part of, is part and parcel of helping us to drive down the costs,” Nyati said, while arguing that Eskom’s 103 years of experience meant that it was well placed to compete in a more liberalised market.

“It's for this reason that we really did not quite understand why there was always this feeling that Eskom is against this change; this change, as much as it is introducing competition, is actually a healthy thing for Eskom because it's going to be making us better.”

This statement follows a period of uncertainty over whether the Eskom board was fully in support of the creation of an independent State-owned Transmission System Operator (TSO), with ownership and control of the transmission assets.

This reform had been strongly endorsed by President Cyril Ramaphosa, who set up a task team in February to oversee the creation of a TSO with the transmission assets, in direct contradiction to an earlier Eskom plan for the assets to remain in the hands of a subsidiary.

A process was now under way to appoint a transaction adviser to support government implement the unbundling of NTCSA, with a request for proposals having been released to secure such an adviser.

Nyati and Ramaphosa also recently held direct discussions on the issue, after which Nyati described government’s decision to establish a fully independent TSO with ownership and control of the transmission assets as “the right policy”.

Besides the focus on electricity affordability, Nyati said the Eskom board would also be prioritising growing Eskom’s role in renewable energy, while expanding its role in the Southern Africa region and facilitating data-centre and minerals beneficiation investments.

The Eskom board would be holding a three-day strategy session in October, during which it would seek to finalise its approach to the Eskom 2.0 strategy objectives that had been set for it by its shareholder.

Ramokgopa said that elements of Eskom 2.0 were already in place, including the launch of Eskom Green as the group’s vehicle for rolling out renewable energy.

“The board is expected to develop a single roadmap for Eskom over the next three, five and ten years.

“It must define the utility’s public obligations, its future generation mix, its commercial position and the investments required to sustain them,” Ramokgopa said, indicating that he saw the group playing a central role in both gas-to-power and nuclear.

The Minister also stressed that Eskom would be expected to fulfil its mandate without relying on repeated fiscal support or sustained double-digit tariff increases.

Here, resolving the municipal arrear debt problem was highlighted as crucial, with Eskom having indicated in August that the debt had increased to R119-billion.

“Municipal debt threatens the financial sustainability of electricity supply and the resources available to maintain the network,” Ramokgopa stressed.

Edited by Creamer Media Reporter