South Africa’s President, H.E. Cyril Ramaphosa, has announced that the country’s power utility, Eskom, will be moved from the Department of Public Enterprises to fall under the Department of Mineral Resources and Energy.
The decision comes as South Africa seeks to improve the efficiency of the state utility, which has been failing to meet the nation’s electricity demand since the implementation of scheduled rolling blackouts (load shedding) since 2008.
The country is currently experiencing stage six load shedding due to generating capacity constraints caused by unplanned breakdowns and planned maintenance.
Announced during South Africa’s 55th National Elective Conference (NEC), which convened on January 5, the bid to change the oversight of Eskom is in line with a resolution decreed by the country’s governing African National Congress, which stipulates that state companies will be overseen by government departments relevant to their specific economic sectors.
The NEC committee highlighted the country’s energy crisis as a key factor in adopting the resolution to reshuffle the management of Eskom, stating that the move will allow the government to better address electricity generation and management of the state utility’s performance.
H.E. President Ramaphosa has indicated that any move to reorder the structure of state-owned enterprises would take time to implement. “We need to weigh up what the consequential issues would be,” H.E. President Ramaphosa stated, adding, “We need to look at the efficacy, the timing and everything else. The resolution will be implemented, it is just a matter of how.”
The announcement comes several weeks after the resignation of Eskom CEO, Andre de Ruyter, who had served as head of the company since January 2020.
Positioned at the center of South Africa’s worsening energy woes, Eskom, which supplies over 90% of the country’s electricity, has been plagued by years of mismanagement, the breakdown of infrastructure at key power stations, sabotage and corruption, with acute loadshedding severely impacting businesses and leading to wide-scale job losses. In 2022, the nation was subjected to a record 205 days of rolling blackouts, with Eskom warning last November that South Africans may face an additional six to 12 months of load shedding, as the power utility plans to remove a further 2,300 MW of generation capacity from the country’s ailing power grid. Since the beginning of the year, South Africa has not had one day where load shedding has not been implemented.
However, state authorities have implemented a series of measures to combat these challenges. Specifically, the Government of South Africa has stationed armed forces at a number of beleaguered power stations throughout the country. Meanwhile, in a bid to open up the power generation space in South Africa and facilitate the participation of more Independent Power Producers, H.E. President Ramaphosa announced in 2019 that the debt-laden power utility would be split into three separate entities, focusing on generation, transmission and distribution, to improve management, reduce costs, increase revenue and drive energy security.
According to H.E. President Ramaphosa, the decision to place Eskom under the control of South Africa’s Ministry of Mineral Resources and Energy – despite facing criticism from analysts – represents one of several measures implemented to address the country’s ongoing energy crisis.