Ramaphosa endorses Eskom reform plan to pave way for independent grid operator

President Cyril Ramaphosa has endorsed the Phase I report of the Eskom Restructuring Task Team, paving the way for the establishment of an independent Transmission System Operator. This aims to create a more competitive electricity market, attract investment, and improve energy security. The endorsement comes after the Presidency last month granted an extension to the Eskom Restructuring Task Team, pushing its deadline to finalise a report on the creation of South Africa's independent Transmission System Operator (TSO) to the end of June 2026. The extension comes as the government continues work on restructuring Eskom, including separating its transmission function from the rest of the utility. The proposed Transmission System Operator forms part of efforts to reform the electricity sector and introduce a more competitive electricity market. The team was originally due to submit its high-level proposal by the end of May. It was established in March 2026 following an announcement by Ramaphosa during the State of the Nation Address (SONA). The task team includes representatives from the Presidency, National Treasury, the Department of Electricity and Energy, Eskom, and the National Transmission Company South Africa (NTCSA). On Friday, July 31, presidential spokesperson Vincent Magwenya said Ramaphosa had endorsed the ERTT's Phase I report. "President Ramaphosa has endorsed the Phase I report of the Eskom Restructuring Task Team (ERTT), setting the stage to restructure South Africa's electricity sector to create competition, unlock investment, reduce electricity prices and ensure energy security for sustained economic growth and job creation." He said the report sets out recommendations for establishing an independent Transmission System Operator separate from Eskom. "This report shows how [the] government can ensure that the architecture of the electricity sector can change as the sector continues to evolve, creating the foundation for South Africa's growth. It is welcomed that all the key stakeholders are aligned on this objective," Ramaphosa said. Magwenya said the report reflects a clear and unified vision across government to establish an independent Transmission System Operator SOC Ltd (TSO), which will be separated from Eskom. "The TSO is a key enabler of a successful competitive wholesale electricity market that is expected to deliver reliable and cost-effective electricity. "This reform will support higher rates of economic growth, investment and job creation." He said the analysis in the ERTT's Phase I report, which was presented to the president by the task team on July 30, 2026, included: An analysis showing that the restructuring is feasible, in line with international best practice, and can be done in a manner that does not compromise Eskom's financial sustainability; Highlighting that the growth in municipal arrear debt to Eskom would need to be addressed because of the threat it poses to Eskom and the broader electricity sector; and Identifying several actions that can be taken immediately to enable the restructuring. Magwenya said Phase II, which starts immediately, will focus on developing the detailed transaction structure and implementation plan. He said Phase II will proceed over the next three months. "The ERTT has proposed that a working group develop a consolidated action plan, encompassing all initiatives aimed at arresting the growth in municipal arrears and identifying those to be scaled up and accelerated. "Such initiatives include stronger enforcement of credit controls, rolling out smart meters and Distribution Agency Agreements (DAAs), and stricter license enforcement, as well as the continued implementation of the Municipal Debt Relief Programme, Metro Trading Services Reform and the Electricity Distribution Industry (EDI) Reform Roadmap." According to Magwenya, the actions identified by the ERTT that could be implemented immediately include interim measures to strengthen the existing National Transmission Company of South Africa's (NTCSA's) independence, as well as the internal ring-fencing of the NTCSA's different licensed activities. "In addition, first steps will be taken toward unbundling tariffs, clarifying the payment waterfall within the restructured market environment, and developing mechanisms to insulate market participants from non-payment. "The proposals to strengthen NTCSA's independence during the interim period until the TSO is established include various requirements to ensure good governance and strengthened regulatory oversight." "Directors serving on the Eskom board will not be appointed to the board of the NTCSA, or serve on the boards of both the NTCSA and Eskom." He said the appointment of the chief executive officer (CEO) and senior management of NTCSA will be the sole responsibility of the NTCSA board. "There will be [a] clear delegation of authority from Eskom to the NTCSA of all decision-making related to the market, financial and operational ring-fencing of NTCSA from Eskom. "Decisions on access to the transmission network are to be relocated to the NTCSA and eventually to the TSO." Magwenya said this includes cases in which connections are at the distribution level but have implications for the market or transmission network. "Eskom Distribution will retain a Grid Access Unit to manage connections to its distribution network where projects connect at this level." Meanwhile, Ramaphosa previously said that the establishment of a fully independent transmission company remained a critical reform to support the introduction of a competitive electricity market and improve long-term energy security and affordability. "I am encouraged by the speed and diligence with which the task team has taken forward this important task," Ramaphosa said. "The establishment of a fully independent transmission company is a critical reform which will support the introduction of a competitive electricity market and ensure a reliable, affordable and sustainable electricity supply to power the economy." IOL previously reported that the National Union of Mineworkers (NUM), has also voiced its opposition to the proposed transfer of transmission assets to an independent Transmission System Operator (TSO). The union is calling for urgent labour consultation before any further steps are taken.