Ramaphosa finally forces Eskom to stop being referee and player

For a century, Eskom has generated South Africa's electricity, owned the wires that carry it, and sold it to customers – a conflict of interest that helped produce the rolling blackouts we came to call load shedding. On Friday, President Ramaphosa endorsed a plan to finally separate the transmission grid into an independent operator, making good on a promise first made in February's State of the Nation Address. Two guardrails will decide whether it works: protecting Eskom's fragile finances, and tackling the municipal debt it's owed. Phase II now has three months to turn the promise into a workable plan..BizNews reporter.Back in February, in the chamber of Parliament, President Cyril Ramaphosa made a promise South Africans had heard in various forms for two decades: “We are restructuring Eskom and establishing a fully independent state-owned transmission entity.” Governments have a long history of announcing such things and then letting them gather dust. On Friday, something happened that suggests this one might actually be different.To understand why it matters, it helps to go back further than February – all the way to 1923, with a utility founded as Escom with a mission to electrify a young, mining-driven economy. For most of the century that followed, a state monopoly built the power stations, owned the wires that carried the electricity, and delivered it to your door. It made sense in an era where scale was needed to produce electricity and when the priority was simply getting a young country wired up. It stopped making sense once the model itself became the problem.Think of it this way. Imagine a school sports match where one team also owns the stadium, appoints the referee and sells the tickets. Even an honest referee will struggle to convince the crowd every call was fair. That, in essence, is what economists mean by a “vertically integrated” utility: the same company generates the electricity, controls the transmission grid that moves it, and sells it to customers – with every incentive to favour itself over any rival generator wanting fair access to the wires. The father of what we now know as capitalism, the Scot Adam Smith, worked out nearly 250 years ago that self-interest, channelled through open competition, tends to serve the public better than a single unaccountable operator ever will. Eskom, for most of its history, has been the opposite of that idea. The result, from 2008 onward, was rolling blackouts that cost the economy hundreds of billions of rand and became a household reality the monopoly dressed up behind the less offensive term of “load shedding”.Friday's announcement is the clearest step yet toward fixing that structure. .Ramaphosa formally endorsed the Phase I report of the Eskom Restructuring Task Team, which he was given the day before. Crucially, it sets out how to carve out an independent Transmission System Operator – a referee with no team in the game – separate from Eskom entirely. It builds on the National Transmission Company of South Africa, spun out as an Eskom subsidiary back in 2024, and is now backed by law through the Electricity Regulation Act. Phase II, designing the actual transaction, starts immediately with a three-month deadline. Two guardrails matter most. First, Eskom must not emerge financially weaker from the split – its balance sheet has been fragile enough without new wounds. Second, the report flags municipal arrear debt – the billions municipalities owe Eskom and a debt they can never fully settle – as a threat serious enough to derail the whole reform if left unaddressed.Eskom's own response, filed on the JSE’s SENS for its bondholders, reads as cautiously reassuring: the utility welcomed that its solvency and the municipal debt problem were both explicitly protected in the plan. Markets read that as stability, not alarm.None of this keeps a single light on tomorrow. What it does do, though, is start dismantling a century-old structure that made power outages almost inevitable. Three months is a short runway for a reform this size, and municipal debt collection has defeated better plans than this one. But for the first time, the promise made in February has a deadline attached to it – and in South African infrastructure reform, a deadline is worth more than a dozen speeches. .Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Ramaphosa finally forces Eskom to stop being referee and player

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