Independent transmission system should be in place by end of year, says Eskom CEO

Chief Executive Andre de Ruyter on Monday, 15 February 2021 said that Eskom would complete the legal separation of its transmission unit by the end of 2021, if all goes according to plan.

The process was initially announced by President Cyril Ramaphosa back in 2019. However, as load shedding continued along with South Africa’s financial troubles, the process was stalled.

Separation of Eskom’s transmission unit

This is one of the ways in which government could alleviate the stress on the power utility and mitigate the supply in shortfalls which continually lead to load shedding and power cuts across the country.

Speaking at a virtual event hosted by the Free Market Foundation (FMF) on Monday, De Ruyter said lifting the licence exemption to well above the current 1-MW threshold “could assist us in unlocking additional capacity”.

“Projects above 1 MW are required to follow a licensing process with the National Energy Regulator of South Africa that has been designed primarily for utility scale investments.”

Leveraging private capital

This would be accomplished by “quickly leveraging private capital”. De Ruyter described the process as “probably one of the easier decisions, hopefully, that government can take”.

The Eskom CEO said the team welcomes President Ramaphosa’s announced at SONA “regarding the lifting of the cap on so-called embedded, or self-generation without a licence”.

He added that the process “in principle, is a good thing”, and hopes that it will “unlock investment in generation capacity and go some way to bridging the generation shortfall that we’ve got”.

De Ruyter also explained that transmission is prioritised “to enable us to demonstrate to private investors, in generation in particular, that their bids will be fairly adjudicated compared to legacy Eskom generation”.

Eskom’s debt

It’s estimated that Eskom is in debt of R460 billion to R485 billion, and according to De Ruyter, the power utility is geared to report another “substantial loss” for the year ahead.

An increased reliance on renewable energy could be the turnaround that Eskom had been hoping for.

“The underlying issue is how much debt each of the divisions can and should be carrying. If all the actors in this ballet play their role and give us those approvals as quickly as is required, we should have the ITSMO (independent transmission system and market operator) in place within the year.”