At the SONA 2019, South African President, Cyril Ramaphosa announced a very dramatic and bold decision to remodel the ailing state power utility Eskom. The plan is to provide financial support and splitting it into three seperate state-owned entities, dealing with generation, transmission and distribution. This after Eskom suffered major financial losses, debt and huge operational problems. Ramaphosa made mention of the fact that this would allow each segment to manage it’s costs more efficiently and would make it easier for them to raise funds.
Splitting up Eskom may make it easier to manage and improve its operational performance but it will do little to address it’s financial woes, atleast in the short term. Risk agencies has recently seen Eskom as a risk to South Africa’s highly industrialized economy due to the recent spike in black-outs and huge debts which slows down it’s growth prospects. It has been struggling recently, to produce enough power to deal with demands with it’s old, unreliable plants.
Meanwhile, Cosatu have taken a stance against this decision, saying that they do not support the decision to split Eskom into 3 seperate entities. Cosatu’s first deputy president Michael Shingange says that splitting up the state owned enterprise would not solve it’s bad governance practices and debt, and could potentially lead to retrenchments and would open the door to privatization.