Most people familiar with Mteto Nyati’s impressive record as a turnaround strategist at technology group Altron, not to mention at Eskom since becoming chair three years ago, will be relieved that his term has been extended for another three years.
But given the disagreement he has with his shareholder about the unbundling of Eskom’s transmission assets, which account for 37% of its revenue, should he have accepted another three-year term?
“There was never any fundamental disagreement with either the president or the government’s reform policy,” Nyati tells the FM. “The issue was around the execution of that policy. We were aligned in terms of destination.”
That’s not how President Cyril Ramaphosa felt about the “revised unbundling strategy” Eskom’s board presented to electricity minister Kgosientsho Ramokgopa, who announced it in December last year.
According to this, the country’s transmission assets would remain under the ownership and control of Eskom through the National Transmission Company South Africa (NTCSA) which, far from being independent in line with government policy, would remain a subsidiary of Eskom.
The announcement of Eskom’s “revised plan” prompted an immediate rebuttal from Ramaphosa and restatement of the government’s plan to remove the transmission assets from Eskom.
In his state of the nation address six weeks later and again more recently, the president made it explicit that government policy was to have a fully independent state-owned transmission system operator owning and controlling the transmission assets as a matter of urgency.
“That’s fine,” says Nyati. “That’s why he has put together the Eskom phase 2 restructuring team to see how we can make sure this happens. The principle here is his commitment that Eskom must never be worse off. All of us want this to happen as soon as it is practically possible.”
Dragging things out?
Big business has its doubts.
In August Business Leadership South Africa (BLSA) CEO Busi Mavuso said there were “too many signs of a lack of urgency and commitment” to follow through on reforms investors need to see before investing. Eskom’s resistance to unbundling the transmission assets was “one of the clearest examples”, she said.
Will investors invest if there is uncertainty about Nyati’s commitment to facilitate a fully independent competitive energy market as quickly as the president and industry want it to happen?
“I’ve had a meeting with the president and that gave us the assurance that all of the risks we are worried about will be taken care of. What more does anyone want when you see practical steps being taken to address the risks that we have put on the table? Why would investors not be comfortable with that?”
Does he concede that as long as the transmission assets remain within Eskom as stipulated in its revised unbundling strategy, there will not be the fully independent, competitive energy market the South African economy so desperately needs?
“We have no problem about the assets moving out of Eskom, and we’ve never had a problem with that,” he says.
What about the “when”?
“The timeline has got nothing to do with the assets moving out. The timeline is linked to the risks we have identified. Now that those risks are being properly managed, we have no problem. That’s exactly what we asked for. We shouldn’t be looking for differences where there are none. There are no differences.”
What about Eskom’s revised unbundling strategy, according to which transmission assets will remain owned by the NTCSA as a subsidiary of Eskom?
“Our mission is to enable the liberalisation of the energy market. That’s our job. That’s what I’ve been tasked to do together with my board,” Nyati says.
The problem was that it needed to start, said Mavuso, and “the Eskom board is not starting it. The signals are of slow-walking, of foregrounding obstacles rather than solutions, of hoping that political will fades the longer the process is dragged out.”
This provoked a furious response from Nyati, who accused business of political interference and vested interests, followed by talks in which Eskom, BLSA and Business Unity South Africa supposedly agreed on the “destination” and the need to reach it through “careful sequencing”.
“Everybody is in agreement, which is precisely what we wanted,” says Nyati. “We wanted to make sure we do things in the right way. We’re comfortable that everybody is working towards the same goal.”
Sceptics say “careful sequencing” will allow him to kick the transmission unbundling can down the road indefinitely.
“They’re entitled to their views. Right now, we should be looking at managing the risks and making sure that we get this thing done within the timelines that have been set,” he says.
National Treasury director-general Duncan Pieterse, who co-chairs the Eskom restructuring task team, has said that moves are under way to transfer ownership and control of Eskom’s grid assets to an independent transmission system operator over the next 18 months as a prerequisite for the investment and competition needed for affordable electricity.
A detailed implementation plan is due to be submitted to Ramaphosa later this year, he told an RMB Morgan Stanley conference in September.
“That’s the focus we should be having right now,” says Nyati.
No double-digit increases
When Ramokgopa announced that Nyati would be getting another three-year term as chair, he made his conditions quite clear: no more bailouts or double-digit tariff increases.
Can Eskom, which is only alive because of bailouts of R496bn from 2008 to 2025/2026, and obscenely high tariff increases totalling 1,172% between 2008 and 2026, survive without?
“Already two years ago we came out as Eskom that our focus is making sure we have single-digit increases,” Nyati says.
Maybe so, but its 2025/2026 tariff increase was 12.74% and in January 2027 it will be going up a further 8.8%.
“We’d like to have increases that are in line with CPI. So the decision of the minister is very much in line with Eskom.”
He concedes, however, that the chances of Eskom’s multiyear price application to energy regulator Nersa in 2027 for the following three years being in line with CPI are “low”. It depends on how much Eskom can cut costs, and the board has told management to cut costs by R112bn over five years, he says.
Will they be cutting the 42,030 employee headcount?
“There are no holy cows.”
When will more affordable electricity prices materialise?
“When we start to have the open market where there is trading and you have a lot of competitors.”
He cannot put a timeline on that, he says.
“But all of these things talk to making sure our country becomes competitive again when it comes to attracting businesses and beneficiating critical minerals. That will be a dream if we are not able to deliver prices that are affordable. So we do not need to be reminded of the importance of timelines. We get that.”
He resents the current leadership being blamed for the R220bn Eskom has received from taxpayers since he became chair three years ago.
“We are very grateful to the taxpayers. We were not here when those things happened, but we are here to clean up the mess so that we can have an entity that is able to stand on its own two feet.”
He raises its R30bn profit in the 2026 financial year as an indication that it’s getting there. He says it’s a measure of increasing operational efficiency and selling more.
Others would say it’s a measure of obscene tariff increases because, in fact, electricity sales fell 6.2% in the past financial year.
“That’s because we have seen demand coming down,” he says.
How is Nyati going to find more customers, another of the minister’s conditions, when more and more commercial customers, who can access funded solar electricity at half the cost of Eskom, are leaving?
“Eskom Green is an entity we set up to deliver renewable energy to clients. We are competing with companies that are in this space.”
He concedes somewhat grudgingly that this is precisely why there are concerns about Eskom being both a competitor and owner of the grid.
How much longer is Eskom going to be reliant on the mega-bailouts that taxes provide?
“The reason we were brought here is to fix Eskom so it will need no bailouts, and we’re already on our way to that. The only big risk we see is municipal debt. This is now not an Eskom problem only; it’s a national problem. It is Eskom that is owed.”
R120bn and counting …
