South Africa to get a new electricity SOE

The Minister of Electricity has approved Eskom’s new unbundling plan, which recommends the creation of a new state-owned enterprise separate from Eskom. 

Eskom has drafted an unbundling strategy that would end its monopoly on electricity in South Africa by breaking the company down into smaller, independent divisions. 

Eventually, this will allow South African energy consumers to choose from multiple companies to supply their electricity, not only Eskom.

The new plan breaks Eskom down into:

• A generation company, GxCo, the National Electricity Distribution Company of South Africa (NEDCSA);
• Renewable energy entity, Eskom Green; and the
• National Transmission Company of South Africa (NTCSA). 

The NTCSA, formerly Eskom Transmission, has already been legally separated from Eskom and is responsible for the country’s transmission infrastructure. 

The plan now includes a new entity that will be responsible for providing access to the transmission network and managing energy trading, known as the Transmission System Operator (TSO). 

This new entity will assist new companies in entering the electricity market without going through Eskom.

The TSO will be established outside of Eskom, and will not run as a subsidiary, so as to level the playing field and end Eskom’s monopoly on the grid. 

Speaking to eNCA on the sidelines of the African National Congress (ANC) National General Council, Minister of Electricity Kgosientsho Ramokgopa said this is in line with the Electricity Regulation Amendment Act.

The act, signed into law in August 2024, outlined the shift from an Eskom monopoly to a competitive, multi-market model which would assist with lowering electricity prices, ending load shedding and attracting investment. 

Undermining the Eskom monopoly

“We are going to ensure there is non-discriminatory and transparent access to the grid,” he said.

“The biggest concern that actors outside of Eskom have is that Eskom is a player and a referee, so Eskom is going to advantage itself when there is a need to access the grid and it can penalise others unfairly. This makes for uneven rules.”

Ramokgopa said this is illustrates an ongoing commitment to reforming the energy system to allow for more competition. 

“Ultimately, the end consumer should be the biggest beneficiary, because it introduces multiple options on the generator side. You will not be tied to Eskom; you can have your own arrangement,” he said. 

The rollout will begin with businesses, who will soon be able to choose their electricity provider. Households will follow “much later,” according to the minister. 

“The net result will be that the economy that’s growing, get people into jobs and bring down the cost of electricity.”

The NTCSA will continue to own, expand and maintain the country’s transmission assets and will continue to operate as a subsidiary of Eskom.

While the new SOE is set up, the NTCSA will continue to perform all transmission-related functions. 

Now that Eskom has received approval from the minister for the revised unbundling plan, implementation will begin and conclude by 2030.