Forget Eskom’s former glory

Former Eskom CEO André de Ruyter said South Africans should let go of their nostalgia for the “Eskom of old” as the utility will continue to shrink and transform into a transmission business.

De Ruyter told Nuuspod that South Africans must abandon their nostalgia for when the country had cheap power produced by Eskom that was available 24/7. “That time is gone. I don’t think we’ll see it again,” he said.

He said the only logical outcome of Eskom’s reform and restructuring is that the company will be unbundled into three divisions — generation, transmission and distribution.

He said the utility will continue to generate electricity for a considerable time. However, it will inevitably become smaller as coal power stations reach the end of their lifespan and are decommissioned.

“Mechanical equipment has a limited lifespan, and the new generation capacity will increasingly be provided by the private sector — that is a well-established fact,” he said.

This is already taking place, as Eskom’s failures to reliably and consistently provide electricity to South Africa have pushed those who can afford it to opt for alternative energy solutions like solar.

South Africa has imported over R16.5 billion worth of solar panels in the first nine months of 2023, equal to over 4,500 MW in generation capacity.

De Ruyter said Eskom’s transmission business would handle the high-voltage supply between power generation and consumption points — a role that Eskom will still largely play going forward.

He recommended that the cheap financing the country gets from the EU and the US should primarily be used for expanding South Africa’s transmission network because it is a natural monopoly and should mostly be owned by the state.

On the other hand, the role of distribution will increasingly be fulfilled by local authorities like municipalities.

This is because “the closer the service delivery is to the client, the better”, he explained.

In short, Eskom will become smaller and smaller and, in the future, will primarily operate as a transmission business.


This article was first published by Daily Investor and is reproduced with permission.

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Forget Eskom’s former glory