South Africa will hire advisers in the coming weeks to begin negotiations with lenders on a plan to spin off state-owned power utility Eskom’s transmission subsidiary, according to the head of the National Treasury.<\/p>\n\n\n\n
President Cyril Ramaphosa has endorsed the creation of an independent transmission system operator, or TSO, outside Eskom as part of efforts to open the electricity market to greater private-sector participation. <\/p>\n\n\n\n
But carving out the utility\u2019s most profitable division has raised concerns about Eskom\u2019s long-term financial viability and the treatment of government guarantees backing its debt.\u00a0<\/p>\n\n\n\n
\u201cThe transaction is being carefully designed to ensure that Eskom is left no worse off, and that Eskom remains sustainable,\u201d Treasury Director General Duncan Pieterse said in an interview in Cape Town on Tuesday. \u201cThe TSO itself also has to be sustainable.\u201d<\/p>\n\n\n\n
Pieterse, who Ramaphosa this year appointed to head a team in charge of Eskom\u2019s restructuring, faces a complex balancing act in ensuring that all the company\u2019s units remain viable after the split, and that Eskom\u2019s bondholders accept the changes. <\/p>\n\n\n\n
\u201cThere are ways of designing this transaction to achieve all of that,\u201d he said. \u201cWe have no interest in running a process where lenders are not brought along.\u201d<\/p>\n\n\n\n
The process will require engaging the market and careful planning with transparency playing a key role, said Raphi Rootshtain, lead portfolio manager at Otto1890 Asset Management in Johannesburg.<\/p>\n\n\n\n
\u201cThere\u2019s a whole lot of covenants that exist currently and agreements in place with current existing debt,\u201d he said by phone on Wednesday. <\/p>\n\n\n\n
\u201cFrom what I understand, there will be need to somehow restructure that debt in order to be able to move ahead.\u201d<\/p>\n\n\n\n
The government has guaranteed about R330 billion of Eskom\u2019s debt, according to Pieterse.<\/p>\n\n\n\n
Eskom itself this week warned that the process will have to be managed carefully as establishing the transmission operator as a separate business would entail a material event \u2014 a significant development that fundamentally alters the risk profile of its credit.<\/p>\n\n\n\n
Pieterse declined to say whether Eskom or the government may need to secure bondholder consent for the split, saying the first step would be hiring a transaction adviser.<\/p>\n\n\n\n
\u201cOf course the process will be managed properly,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Plans to establish an independent Transmission System operator will start in the coming weeks, signalling an end to Eskom’s monopoly on the national grid.<\/p>\n","protected":false},"author":59,"featured_media":792251,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2084964895884288112","_sma_facebook_post_id":"191437357620492_2167394870747579","_sma_instagram_post_id":"17940903654291530","_sma_x_attempts":1,"footnotes":""},"categories":[9874],"tags":[1293,25910,1164,26005],"class_list":["post-868938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-cyril-ramaphosa","tag-duncan-pieterse","tag-eskom","tag-tso"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868938","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=868938"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868938\/revisions"}],"predecessor-version":[{"id":868942,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868938\/revisions\/868942"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/792251"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=868938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=868938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=868938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}