S. African cabinet supports proposal to split embattled power utility Eskom

Source: Xinhua| 2019-02-15 23:59:18|Editor: yan
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CAPE TOWN, Feb. 15 (Xinhua) -- The South African cabinet on Friday threw its weight behind a proposal to split embattled power utility Eskom which is blamed for a worsening power crisis.

"The strategic unbundling of Eskom into three separate wholly state-owned entities -- generation, transmission and distribution -- is required for the long-term sustainability of the power utility and the country," the cabinet said in a statement after a fortnightly meeting in Cape Town.

In his State of the Nation Address (SONA) earlier this month, President Cyril Ramaphosa proposed to split Eskom which he said has been termed too big to fail, placing the government in a position "where all its eggs are in one basket."

His proposal has received the most attention from various sectors, particularly after a series of attempts have failed to salvage cash-strapped Eskom.

A unitary Eskom has proven to be difficult to lead, Ramaphosa said on Thursday during a debate on his SONA in Parliament.

High levels of debt and default risk have left Eskom in dire straits as the power utility battles to meet demand.

The state-run parastatal is facing debts amounting to 420 billion rand (about 30 billion U.S. dollars). The Department of Public Enterprises said on Wednesday that Eskom would cease to exist at the current trajectory by April this year.

In its Friday statement, the cabinet said South Africa's energy supply remains an absolute imperative and the current situation at Eskom poses significant risks to the country, its financial stability and the economy.

To address the recent situation, Ramaphosa has appointed a special cabinet committee on Eskom led by Deputy President David Mabuza and comprising the ministers of public enterprises, energy, finance, transport, intelligence and police.

This committee will deal with matters of Eskom daily and deliver daily reports to the president on what actions need to be taken to secure energy supply, according to acting cabinet spokesperson Phumla Williams.

The team is expected to meet with all stakeholders to help restore stability to the grid and chart a way forward whilst ensuring that there is minimal economic cost to the consumer and taxpayers, said Williams.