Picture: REUTERS
We have been regularly reminded that Eskom is too big to fail, too important, too much of a risk. It will also clearly not succeed in its current form.on June 20 when Ramaphosa announced that Eskom is to be allocated R230bn in fiscal support through a Special Appropriation Bill. This money is meant to stabilise the entity, in parallel to a more fundamental intervention through the utility’s unbundling, led by a chief restructuring officer.
The role of private business in the energy sector is complex. And the current simplistic polemic for and against privatisation is irrelevant to how the system operates. As an enormous, single, wholly state-owned utility, Eskom’s procurement of goods and services from the private sector and foreign government state-owned companies has failed to consistently meet the requirements of the Public Finance Management Act and the constitution.
Structural reform, unbundling, or ring-fencing the national state-owned grid will change the way Eskom interacts with private companies. In the context of Eskom’s limited capacity to raise capital for a just and sustainable transition away from coal dependency, it is likely a state-owned grid company will contract more IPPs, for example. This is significant and should be robustly debated and designed.
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