Home / Business and Economy / South Africa Splits Eskom for Power Revival
South Africa Splits Eskom for Power Revival
13 Feb
Summary
- South Africa will separate Eskom's transmission grid into a new company.
- This reform aims to attract private capital for a reliable electricity system.
- The IMF urged faster reforms, citing Eskom's weak debt-servicing capacity.
South Africa is set to restructure its power utility, Eskom, by separating its transmission grid into a standalone company. President Cyril Ramaphosa announced this key reform on Thursday, a move closely watched by international investors seeking to bolster the nation's energy infrastructure. This initiative aims to attract vital private capital to create a more reliable and modern electricity system.
The decision addresses the long-standing issue of rolling blackouts caused by Eskom's aging plants and financial instability. The separation of transmission assets is seen as critical for economic growth, as power transmission has been a major bottleneck. South Africa requires an estimated 390 billion rand over the next decade for transmission infrastructure, a sum Eskom cannot provide alone.
International financial bodies like the International Monetary Fund have called for swifter electricity reforms. The IMF's recommendations include separating Eskom's generation and transmission units, establishing a wholesale market, and supporting private transmission projects. These reforms are vital given Eskom's weak debt-servicing capacity and rising public debt levels.
