South Africa woke up this week to headlines celebrating a breakthrough in electricity reform: ministerial approval for Eskom’s revised unbundling strategy and the creation of an independent Transmission System Operator (TSO).
Much of the reporting has been upbeat. Some commentary has even suggested this marks the long-awaited restructuring of the electricity-supply industry.
It does not.
What has been approved is not the unbundling envisioned by the presidency in 2019, not the structure outlined in the original Eskom roadmap, and not the model required by the Electricity Regulation Amendment Act.
Instead, South Africa is moving toward a hybrid arrangement that preserves Eskom’s ownership of the grid, strips the new TSO of transmission assets and risks recreating precisely the conflicts of interest the reform agenda was meant to eliminate.
This should trouble anyone who cares about electricity security, investor confidence and long-term growth. Strikingly, it has not yet triggered the alarm it deserves — not from lenders, not from major energy users, not from independent power producers, and not even from organised business.
The original reform plan was built on a simple premise: Eskom’s vertically integrated structure had become a systemic risk. Transmission was the lynchpin of the solution. A truly independent grid company would own the transmission assets, build new grid capacity to unlock renewable energy, dispatch generation transparently, run the market operator and central purchasing agency, and guarantee non-discriminatory access.
The logic was obvious. A competitive electricity sector cannot exist if the dominant generator also controls the grid. Transmission infrastructure cannot be built at the scale required if the entity responsible for it is financially distressed. And investment will not flow if the structural conflict of interest at the heart of Eskom’s design is left intact.
The ERA Act reinforced this logic by requiring the establishment of an independent TSO within five years. The minister’s announcement confirms a major shift away from this vision.
The National Transmission Company of South Africa — a subsidiary of Eskom Holdings — will retain ownership of the transmission assets. A new independent TSO will be created outside Eskom, but without any assets. The NTCSA’s own statement emphasises the independence of the TSO, yet explicitly confirms that planning, expansion and ownership of the grid remain inside Eskom.
This is not independence. It is administrative separation without financial or operational autonomy. A TSO without assets cannot raise capital at a reasonable cost. It cannot build the 14,000km of new transmission South Africa requires. It cannot guarantee system adequacy or equal access for all market participants. It will remain dependent on an Eskom subsidiary whose balance sheet is already exhausted and whose institutional incentives have historically discouraged competition.
The consequences are serious. South Africa needs to double generation capacity over the next decade, and there is substantial renewable energy capacity ready to proceed. But none of it can connect to a grid that does not yet exist.
Under the revised model, grid expansion remains inside Eskom, which lacks both the financial capacity and the track record to deliver it. The new TSO will be tasked with operating a system it cannot expand and running a market whose participants cannot connect. Investor confidence and project bankability — the foundations of private investment — become uncertain.
This outcome was predicted years ago. When the line-ministry and shareholder-ministry roles were merged, Eskom’s balance-sheet concerns began to outweigh the national reform agenda.
The minister’s statement makes this explicit: the structure was chosen to “preserve the financial stability of the Eskom Group” and minimise disruption to its “highly leveraged balance sheet”. In other words, the reform has been redesigned to suit Eskom’s constraints, not the country’s needs.
The ERA Act envisions a competitive wholesale electricity market by 2026. Such a market requires independent dispatch, transparent rules, credible price signals and non-discriminatory grid access. Fair grid access, in particular, is near impossible if the grid remains under the control of the dominant generator’s holding company.
Eskom’s history is long and well-documented: delayed budget quotes, opaque grid-access processes, insufficient transmission build-out and decisions that favoured its incumbent position. These were not isolated failings; they were structural. Keeping transmission assets inside the same structure repeats the mistake.
Perhaps the most surprising feature of this moment is the silence from those with the most at stake. Banks and investors know that capital cannot flow into a grid housed inside a distressed balance sheet. Large electricity users will bear the costs of delays and inefficiencies. Independent power producers cannot proceed without timely grid access. Even the Energy Council of South Africa, often vocal on reform matters, has not raised concerns about this structural reversal. Reform momentum depends on a shared understanding of what is required. That consensus now appears fractured, if it exists at all.
International experience is clear: the grid must sit in an independent, asset-owning transmission company capable of raising capital, planning long term and operating neutrally. The revised strategy does not achieve this. It is partial separation dressed as reform, and it preserves the structural problem at the heart of South Africa’s electricity crisis.
Yes, South Africa has stabilised Eskom’s operations in the short term. Load-shedding has eased. Financial performance has improved. But none of this changes the fundamentals: an ageing coal fleet heading for retirement, a utility unable to finance new builds, a fiscus that cannot continue bailing it out, and massive renewable-energy projects stranded behind inadequate grid capacity. Unbundling was meant to confront these realities, not defer them.
Reform rarely fails because of bad intentions. It fails through compromises that seem small at the time but accumulate until the system becomes unworkable. This is such a moment. And unless investors, businesses, regulators and policymakers say so clearly — and soon — South Africa risks losing another decade to structural inertia.
• Kruger is director of the Power Futures Lab at the Graduate School of Business, University of Cape Town.