A new Eskom unbundling strategy, which uncouples the grid assets from the system operator role to be performed by a separate and yet-to-be-established transmission system operator (TSO), has been approved by Electricity and Energy Minister Dr Kgosientsho Ramokgopa.

Under the strategy, the National Transmission Company South Africa (NTCSA) will continue to own, expand and maintain the national grid and will also remain a subsidiary of Eskom Holdings.

In a statement, Ramokgopa said a legal and regulatory process would now be initiated for the creation of a separated TSO as envisaged in the Electricity Regulation Amendment Act (ERAA).

The TSO would perform the functions of system operations, market operation and central purchasing, while ensuring non-discriminatory access for market participants and enabling the emergence of a competitive wholesale electricity market.

The Minister said the proposed approach aimed to “preserve the financial stability of the Eskom Group by minimising disruptions to its highly leveraged balance sheet, thereby mitigating risks to both Eskom and national energy security”.

The ERAA, which was passed in 2024 and came into force at the start of 2025, provides a five-year time horizon for the creation of an independent TSO; an entity seen as key to ensuring a level playing field between generators in a future competitive electricity supply industry.

Ramokgopa argued that the revised unbundling strategy was “meticulously aligned with the ERAA”.

The decision follows much debate about the future structure of the TSO, with several commentators having argued in favour of the NTCSA’s full separation from Eskom Holdings, with its assets, to form the new TSO.

However, Ramokgopa, who is also Eskom’s shareholder Minister following the disbandment of the public enterprises ministry and department, has opted to support a different model; one that also has the support of the Eskom Holdings Board.

“Eskom is now poised to implement this refined strategy in a phased approach, ensuring careful management of financial and operational risks while developing the necessary skills, systems, and institutions for a competitive electricity market,” the statement reads.