Restructuring Eskom in much the similar manner that Transnet was split into various operating entities has always been on the cards and with today’s announcement, the ministry of public enterprises has brought this closer.

In his briefing today, Minister of Public Enterprises Pravin Gordhan provided a positive step towards a sustainable future for the utility as well as an efficient and reliable electricity supply system in South Africa.

The new Transmission System Market Operator (TSMO) will be created as an intermediary between generation and distribution functions and will operate as an independent entity under Eskom. The TSMO becomes a buyer of power from Eskom and from other power producers.

This will foster strong competition in the market and will help reduce the cost of electricity generation. The TSMO will be able to acquire electricity from Eskom, IPPs, neighbouring countries and other sources, potentially including small-scale generation by business and households feeding into the grid.

It is important that the TSMO functions independently with dedicated legislation providing for independent oversight to ensure that it fairly enforces competition between all electricity providers.

The paper also sets out a vision for a transition to greater reliance on renewable energy sources and a transition from the reliance on coal, which provides the bulk of the country’s energy needs. It’s a transition that must delicately handled so as to ensure labour and other stakeholders are not prejudiced in the retirement of older coal plants.

Business supports the roadmap as a key energy consumer. It also stands ready to support the grid through small-scale generation and would welcome further regulatory development to enable businesses to become generators to support the grid.

All South Africans stand to benefit from a reliable, low-cost electricity supply industry that can support the development of the economy. We look forward to further development of the future scenario for Eskom, including details on the financial plan to stabilise the utility’s balance sheet and the appointment of a permanent CEO to deliver on that the roadmap. This will be an important part of the capacity needed to turn vision into reality and will be crucial to the success of the roadmap.