Eskom Pushes for Lender Consent on Transmission Spin off

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(Bloomberg) — Eskom Holdings SOC Ltd. said it will request that one of the key remaining conditions to separate its transmission unit is concluded within the next month, a step that would mark progress toward transforming the business and opening the grid up to private producers. 

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Spinning off the business to become the National Transmission Co. South Africa still requires licenses to operate from the regulator and the consent of lenders, the state-owned utility said in an interim results statement on Friday. Discussions with the parties from whom consent is required and requests for the permission “will be made for conclusion” by April 30, it said.

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South Africa’s cabinet on Thursday approved a bill on electricity regulation designed to clear the path for private generation projects and energy trading. Eskom doesn’t generate enough power to meet demand and its plan to separate the business into generation, transmission and distribution units has fallen behind schedule.

Eskom’s primary energy costs increased 24% in the six months through September from a year earlier. In its assessment of whether Eskom can continue as a going concern, the board considered, in part, “the impact of the continuous deteriorating generation plant performance and increased reliance on more expensive sources” including private producers and diesel-powered turbines “to manage supply and demand,” it said. 

The impact of rising unpaid debts owed to Eskom was also considered, Eskom said. Municipalities owed the utility 56.3 billion rand ($3.2 billion) at the end of 2022, Deputy President Paul Mashatile told lawmakers in Cape Town last week.