Eskom has welcomed the World Bank’s consent for legal separation of the Transmission Division as the bank is a key strategic creditor of Eskom and the largest multilateral development bank.
THE WORLD Bank has granted its consent to the proposed legal separation of the Transmission Division from South Africa’s state-owned power utility, Eskom Holdings, to the National Transmission Company South Africa (NTCSA).
The NTCSA is charged with procuring electricity from Eskom power stations, the Southern African Power Pool and independent power producers in the Renewable Energy Independent Power Producer Procurement Programme and Risk Mitigation Programme.
It will sell energy and capacity to the Distribution subsidiary of Eskom.
Eskom on Tuesday welcomed the World Bank’s consent for legal separation of the Transmission Division as the bank is a key strategic creditor of Eskom and the largest multilateral development bank.
Eskom’s acting group CEO, Calib Cassim, said the World Bank’s consent marked a significant milestone in advancing the utility’s turnaround plan and contributing towards a sustainable resolution of the country’s energy crisis.
“It is subject to certain conditions, eg confirmation that all the necessary suspensive conditions required to operationalise NTCSA have been met,” Cassim said.
“With the NTCSA having obtained licences for the operation of a transmission facility, as well as an electricity Trading and an Import/Export licence from the National Energy Regulator of South Africa (Nersa), obtaining the remaining financial creditor consents is one of the final outstanding conditions to the implementation of the legal separation of Transmission.”
Cassim said they were hopeful that the remaining consents would be granted as soon as possible so that they can finalise this process.
“The legal separation of Transmission is a strategic objective and key aspect of Eskom’s turnaround plan envisaged in the Department of Public Enterprises’ ‘Roadmap for Eskom in a reformed electricity supply industry’,” he said.
“Furthermore, it is essential to allow much-needed new grid access, to encourage investment in the generation sector, and through that help the country improve its security of supply.”
Meanwhile, the World Bank also recently approved a $1 billion (R19bn) Development Policy Loan for South Africa.
This substantial financial support demonstrates the World Bank’s broader commitment to assisting the country and Eskom in promoting long-term energy security.
The World Bank said its Development Policy Loan would contribute to a gradual reduction in water and air pollution by reducing the reliance on coal for power generation.
The bank said the funding will help facilitate “restructuring of the power sector” through the unbundling of Eskom.
“It supports the opening of the power market and aims at improving Eskom’s efficiency by redirecting its resources toward investments in transmission and maintenance of existing power plants,” it said.
The news comes hot on the heels of S&P Global Ratings upgrading the power utility’s credit ratings and revising its outlook as the government has come forth to shoulder the majority of the power utility’s debt.
S&P on Friday upgraded Eskom’s long-term issuer credit rating to “B” from “CCC+” with a stable outlook on the group’s senior secured and senior unsecured debt.
In addition, S&P Global also upgraded Eskom’s South Africa national scale rating to “zaBBB/zaA-2” from “zaB/zaB”.
S&P said the credit rating upgrade was due to its expectation that the South African government’s R254bn financial support package will cover Eskom’s debt servicing and repayment obligations over the current and coming two financial years.
Eskom on Tuesday ramped up its rotational power cuts from Stage 4 to Stage 6 load shedding, for the second time in a space of days, in a bid to replenish emergency reserves.
– BUSINESS REPORT
