Eskom unbundling could be South Africa's Brexit, argues economist

The unbundling of Eskom has already caused tensions between labour and government, with various unions firmly against the proposal.

President Cyril Ramaphosa made the announcement that Eskom would be restructured in his state of the nation address last week Thursday.

The power utility will be broken up into three parts including generation, transmission and distribution in a bid to save costs.

Read: 'It's entirely Eskom's fault, and we take responsibility and apologise'

However, economist Duma Gqubule says plans to unbundle the utility could become a divisive and potentially detrimental move for South Africa.

He has questioned the sudden decision, claiming that the government had no clear plan for Eskom just a few months ago.

Gqubule warns that all stakeholders must be consulted on the proposed process of unbundling. He adds that a task team is needed to address the issues of economic policy.

Also read: Cosatu wants Ramaphosa to explain "unbundling" of Eskom

The way that government is handling it could turn it into the most divisive issue in South Africa over the last 25 years. It could become our Brexit if we don't handle it properly.

Duma Gqubule, Economist and founding director - Centre for Economic Development and Transformation

Eskom is bigger than the board. There are economic policy issues that go to the funding of this entity.

Duma Gqubule, Economist and founding director - Centre for Economic Development and Transformation

Meanwhile, energy analyst Chris Yelland applauds the move and says it's important to take action before Eskom causes severe and irreparable damage to the economy.

He explains that power utility will be split into three subsidiaries under Eskom Holdings and will remain a government entity.

Some unions are up in arms over the unbundling plans and claim that it's a move to get Eskom in the hands of the private sector.

Yelland, however, argues that it is an effort to drive assets into the utility and create self-standing entities with the state as a shareholder.

I think it's a good move and an important first step in the restructuring of Eskom, which is currently facing severe financial, operational and environmental problems.

Chris Yelland, Energy analyst, managing director and investigative editor - EE Publishers

This is certainly not privatisation, but preparing Eskom for a future structure.

Chris Yelland, Energy analyst, managing director and investigative editor - EE Publishers

Listen to the in-depth discussion:


This article first appeared on CapeTalk : Eskom unbundling could be South Africa's Brexit, argues economist


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