Home South African Eskom up to challenges of free market, says Marokane

Eskom up to challenges of free market, says Marokane

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Eskom Group CEO Dan Marokane is confident that the power utility will be able to lead the looming electricity free market through its people and innovative strategies, including in debt recovery and adapting to the required new technologies.

Eskom Group CEO Dan Marokane speaking during a media briefing on the state of the South African power system. File picture: Reuters, James Oatway

ESKOM Group CEO, Dan Marokane, is confident that the utility will be able to lead the looming electricity free market through its people and innovative strategies, including in debt recovery and adapting to the required new technologies.

This comes as Eskom pivots to new terrain following the passing of the Electricity Regulation Bill last month, establishing a state-owned Transmission System Operator (TSO) that will operate the national transmission grid and create an open-market platform to enable competitive trading of electricity, ending Eskom’s 100-year monopoly.

Since taking office 100 days ago, Marokane has prioritised staff motivation, piloted partnering with municipalities over the R74 billion overdue arrears, legitimising illegal connections, and getting fair value for disposed assets, including the Eskom Finance Company (EFC), which is expected to unlock cash reserves when a deal is concluded before year end.

Marokane said the utility had made progress in readying the supply chain and resuscitating some of its units that had been highly efficient in the rollout of transmission lines, as it looked at going beyond a 300km per year target to the historical 800km to reach the target of 14,000km by 2030.

He said procurement processes would be tightened, and a focal team established to nitpick over the processes to ensure the R350bn five-year capex spend was executed on projects to improve the bottom line.

“We have an opportunity to retain our role as a critical player in as far as electricity supply is concerned. It is for that reason that we want to pivot and implement some of these initiatives to announce the next chapter of Eskom,” Marokane said.

“To evolve will happen through disciplined implementation, disciplined execution with the right resources from within and outside.”

Marokane said that in the next two weeks, Eskom would ensure that the launch of the National Transmission Company of South Africa (NTCSA) happens without glitches, and more importantly the acceleration of the Transmission Development Plan (TDP) plan to meet the country’s demand and unleash further capacity from renewables business.

He said mistakes that had resulted in the slow pace of unbundling the NTCSA would not be repeated with the Generation Division, which he said was a complex mergers and acquisitions minefield.

“When we did a post-mortem review looking at the implementation and progress of the NTCSA, we picked up clear areas that required attention and needed us to beef up capacity given the complexity of these transactions,” Marokane said.

“This business has not done it before. We have materially moved with the transmission on our own with advisers from a legal and financial modelling perspective. These are very complex merger and acquisition transactions and you will have an appreciation that things have to be really methodically followed through for us to meet the timelines we have set for ourselves.”

In another development, Marokane was confident of a final breakthrough in the sale of the long disrupted process of the EFC, its mortgage unit, which has a R9bn loan book.

“We have been trying to sell for many years and the processes have not been concluded for various reasons. One of them being that it has to be sold for the right figure, it cannot just be given away,” he said.

“I am comfortable that the processes currently under way in as far as EFC is concerned should place us in a position where there is a high likelihood that we may have closure on the transaction in the second half of this year.

“Again, the commerciality has to make sense and that is the approach we are taking. We are committed to fulfilling all conditions that are placed on us by the National Treasury to convert our debt to equity. So we talk to them and we are constantly updating each other on progress in that regard.”

Eskom has piloted partnering with municipalities to recover its legacy debt amidst the slow uptake of the debt review process in which qualifying ones have a third of the debt written off.

The power utility has signed an active partnering agreement with the Maluti-a-Phofung Municipality in the Free State, which has an annual R1bn bill, for Eskom to take over the operations which include maintaining and operating their network, as well as billing and collecting the cash directly into the Eskom bank account until debt settlement.

– BUSINESS REPORT

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