South African President Cyril Ramaphosa has endorsed the unbundling of Eskom's transmission assets, a move aimed at boosting the country's power grid. This decision follows a report from the Presidency's Eskom Restructuring Task Team (ERTT), which deemed the restructuring feasible and in line with international best practices, provided that the ballooning municipal debt to Eskom is addressed. This debt is currently over R100 billion and is projected to exceed R300 billion by 2030 if not controlled.
The ERTT has proposed a working group to develop an action plan to address municipal arrears, including stronger enforcement of credit controls, rolling out smart meters, and implementing distribution agency agreements. Eskom has welcomed the ERTT's Phase I report, particularly its emphasis on establishing an independent Transmission System Operator (TSO) in a manner that safeguards Eskom's financial sustainability, avoids defaults, and addresses lender requirements. The report highlights that the establishment of a TSO is a significant event for Eskom's lenders and necessitates careful engagement.
While Ramaphosa backs the asset split, ratings agency Moody's in June 2026 had highlighted business and credit risks associated with stripping Eskom of its transmission assets, which account for nearly 40% of its core earnings. Moody's warned that a botched unbundling process could be credit negative for Eskom. Despite these concerns, the ERTT concluded that the restructuring can be done without compromising Eskom's financial sustainability, provided the municipal debt issue is tackled effectively. The National Transmission Company South Africa (NTCSA) will take on the capital-intensive task of building 14,000 km of high-voltage transmission lines over the next three years.
