What to do about Eskom?

This year, in his budget speech, the Finance Minister announced that Eskom, the state-owned, crisisriven electricity utility would be unbundled into three entities through the creation of subsidiary companies under Eskom Holdings. The decision flows out of a report of the Eskom Sustainability Task Team, appointed by the President in early December 2018. The three entities will be responsible for generation, transmission and distribution, and each will have its own board and management structures. Eskom, it was announced, would also be supported by “an allocation” of R23 billion per year for the next decade, although the effect of this was undermined by Nersa, which adjusted the tariff award to Eskom downwards to take account of what it deemed to be a new source of revenue. The purpose of this report is to identify the key challenges Eskom faces and to suggest possible solutions. In the spirit of the unbundling, each subsidiary to be formed is considered separately.