Eskom's Grid Battle: Why Political Interference, is the real threat, not ownership.

LEON LOUW | Who should decide the fate of Eskom’s transmission grid?

Article first published by Business Day 20 July 2026

When President Cyril Ramaphosa announced in the February 2026 state of the nation address (Sona) that the government would take a “fully independent, state-owned” electricity transmission system operator (TSO) from Eskom, the utility was shocked, some were delighted and others offended. In the ensuing public spat a national interest principle is overlooked.

Instead of providing long-awaited clarity, the announcement raised a fundamental governance question: who should control state-owned entities (SOEs)? The board and management, the presidency, the ministry, officialdom or “the market”?

The confusion highlights the need for clarity, which implies a zero position regarding who should own and control transmission. Space does not allow for doing justice to the substantive concerns on either side. The Eskom impasse is an opportunity to interrogate the general question of political interference that has plagued and even destroyed SOEs, from the Small Business Council to SAA. Last week, former finance minister Trevor Manuel warned against the disastrous consequences of political interference.

The question is not whether Eskom should be divested of ownership but who should decide, how should they do so and to which beneficiaries?

The answer in law and King 4 governance principles is that such decisions should be free from external interference. Should shareholders, in this case the government, disagree with boards or management, they may overrule them by special resolution or replace them but not interfere arbitrarily.

Since the Electricity Regulation Amendment Act 38 of 2024 was preceded by extensive consultation yet is silent on ownership, the default legal assumption is that ownership must remain with Eskom unless otherwise decided by the board or statutorily amended.

Confrontation instead of negotiated consensus would be ill-advised. Eskom’s problems started with the rise of political and regulatory interference during the 1990s. That ended nearly a century of glorious autonomy and should not be repeated.

The act requires an independent TSO within five years, by 2030. Meanwhile, the National Transmission Company of South Africa (NTCSA), an Eskom subsidiary, performs the TSO function.

The act does not mandate the transfer of grid ownership to a new owner by the Sona date or at all. The date mentioned might, in any event, be premature given the five-year window which must be presumed to envisage careful consideration and planning not overridden by executive fiat. If the legislature intended immediate transfer, it was required to say so.

Confrontation instead of negotiated consensus would be ill-advised. Eskom’s problems started with the rise of political and regulatory interference during the 1990s. That ended nearly a century of glorious autonomy and should not be repeated.

Eskom regards financial considerations to be decisive. It carries one of the country’s most heavily leveraged balance sheets. Keeping the transmission grid would, it argues, preserve the asset base against which debt is secured. Without the grid, Eskom’s view is that it would be weaker with fewer assets, diminished creditworthiness and a reduced capacity to service obligations. Its adversaries presume the benefits of ownership transfer to exceed disadvantages

A financially compromised Eskom implies, it argues, higher borrowing costs, higher consumer prices, reliance on the fiscus and instability, including the return of loadshedding. Opponents argue that if Eskom owns the grid, it would, notwithstanding regulation, discriminate against competing power providers and new grid investors that need “wheeling” access to the national grid. Eskom would have an unacceptable conflict of interest. Should this view prevail, the question remains: who should decide? It might require a special resolution, ad hoc legislation or a new board.

Whatever the long-term merits of a separated TSO, careful sequencing and financial structuring will determine whether it strengthens or weakens the electricity sector.

Boards are obliged to operate in the best interests of the entity and to resist political or other interference. Shareholders are not entitled to give instructions to management or boards. A decision to restructure or sell a company’s most valuable asset is the kind of decision company law and King 4 reserve for boards. Replacing their judgment by a political announcement or handing control to political appointees would replace independence with political interference.

The Eskom question invokes a web of considerations. How would (a) a transfer affect Eskom’s financial and public service covenants; (b) a severed entity raise capital at competitive rates; (c) the highest-level technical expertise be ensured; (d) non-discriminatory grid access be guaranteed before, during and after the change; (e) 14,000km of new lines envisaged in the Transmission Development Plan be built; and (f) such questions best be addressed? Is this why the restructuring task team has five years to produce a detailed proposal and implementation plan? Does rushing a decision of this magnitude accelerate benefits or risk mistakes?

Eskom’s turnaround under present management has been impressive, including that the TSO and NTCSA already operate under an independent board and are required to expand capacity and connect new generation. An obvious risk is that an over-hasty transfer to a novice entity staffed by political appointees might amount to an energy security wager.

The government’s scarcely recognised market liberalisation is seismic. It is intended to promote competition and private investment. The unanswered question is whether this requires stripping Eskom of grid ownership immediately, over five years, or at all. The Independent Transmission Projects programme allows private investors to provide competing generation and transmission infrastructure. Investors may partner with Eskom or act independently.

A level playing field with non-discriminatory access purports to be guaranteed by the NTCSA’s obligations and the National Energy Regulator of South Africa’s (Nersa) oversight, though Nersa’s role should be reduced substantially to be relevant in a liberalised market. Concerns that Eskom could discriminate despite controls imply a lack of confidence in the regulator.

It is wrongly assumed that grid ownership by Eskom would be inherently anti-competitive. Whether there is effective competition is not inhibited by “vertical integration”. All that is required, according to contestability economic theory, is freedom of entry. That alone ensures competitive efficiency.

South Africa’s constitution requires new laws and policies to be preceded by meaningful public participation. Legislation also requires socioeconomic impact assessments. However, the Sona announcement was not mandated by legislation, an impact assessment or public participation.

What the country needs is agreement on the most rational short- and long-term Eskom scenario. Unless legislated otherwise, law and good governance leave the route and timing to those entrusted with running Eskom.

This principle extends far beyond Eskom. It is a profound principle to be universally revered and applied.