South Africa plans to deeply reform its power sector over the next 3 years, by unbundling and splitting its heavily-indebted state-owned power utility Eskom and by further opening the market to competition. Eskom would then abandon its near-monopoly and face an increased competition from independent power producers (IPPs) with lower power generation costs.
Eskom will be split into three separate companies dedicated to power generation, transmission and distribution, with a functional separation by mid-2021 and with legal distinction by December 2022. The 3 companies would yet still remain under a state-owned Eskom holding company. The unbundling of the transmission activities should be completed first, in March 2020, and each power plant would conclude a power purchase agreement (PPA) with the transmission company. Eskom will also be allowed to build its own renewable power plants and will review its coal supply contracts in order to cut costs.
In October 2019, the National Assembly approved a new ZAR59bn (US$4bn) bailout plan for Eskom, whose debt exceeds ZAR440bn (US$30bn). As part of the bailout program, Eskom will receive ZAR26bn (US$1.8bn) in 2019 and ZAR33bn (US$2.2bn) in 2020. This amount will come on top of the plan voted in February 2019 that allocates ZAR23bn/year (US$1.6bn/year) over the next decade, starting in 2019.
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