Energy Council Backs Eskom Unbundling To Strengthen South Africa’s Power Sector

The Energy Council of South Africa has announced its support for the phased unbundling of Eskom, calling it an important step to stabilize the country’s power sector and improve long-term energy security. The move aligns with the government’s broader Energy Action Plan, which aims to reform the electricity sector and address ongoing challenges such as load-shedding.

The unbundling process involves separating Eskom into three independent entities—generation, transmission, and distribution. According to the Council, this structure will improve transparency and efficiency while creating a more competitive electricity market. Each division will be able to focus on its specific role, which is expected to improve overall performance and service delivery.

A key focus of the reform is the creation of an independent transmission company. The Council described this as a crucial part of the restructuring, as it will manage the national grid and allow fair access for both Eskom’s power plants and independent power producers. This is expected to encourage the development of renewable energy projects, especially wind and solar, which are needed to reduce reliance on coal and address power shortages.

The Council also highlighted that unbundling will improve accountability within Eskom. At present, the utility’s size makes it difficult to clearly track financial and operational performance. By separating the business units, it will be easier to identify issues and take corrective action where needed. This could also help attract private investment, which has been limited due to concerns about Eskom’s financial health and operational risks.

However, the transition is complex and requires careful planning. Eskom’s large debt burden remains a major concern, and there is also a need to protect jobs during the restructuring process. The phased approach is intended to ensure a smooth transition, allowing assets, systems, and employees to be gradually moved into the new structure without disrupting the electricity supply.

The Council noted that the reform is also important for South Africa’s energy transition goals. By enabling a more flexible and open system, the country can increase the share of renewable energy and reduce emissions. This is seen as essential for building a more sustainable and reliable power sector.

Overall, the Council believes that unbundling Eskom is a necessary reform. While challenges remain, it said continuing with the current structure is not viable, and restructuring offers a path toward a more resilient and efficient energy system.