The latest update on progress being made in implementing the structural reforms that have been prioritised under Operation Vulindlela has again identified Eskom's restructuring as a reform area "facing significant challenges" and where intervention is required.

Lagging restructuring progress at Eskom is one of only three reforms highlighted as facing difficulties, even though several others are listed as experiencing delays.

The other two reforms said to be facing significant challenges relate to the lack of progress in creating a sustainable electricity distribution industry, and a reform set up to clear the country's title-deeds backlog and to make the system more accessible and affordable.

Overall, however, the latest dashboard points to progress being made on 90% of the 30 reforms being overseen by Operation Vulindlela. These cover both the initial reform areas of electricity, logistics, water, and work and tourism visas, as well as the new areas of local government, spatial inequality, and digital transformation.

"So, the reforms in the electricity sector are likely to be pushed out slightly, because we have got to follow particular processes … but the commitment remains that we continue with the restructuring of the electricity sector and Eskom," Dicks said.

He also underlined the importance government was assigning to competition as a way of helping to tackle the steep rise in electricity costs, which was threatening various industries and placing serious strain on households.

The latest update also lists the steps that would be taken to support the ongoing reforms of Eskom and the sector in the coming six months, including developing a detailed implementation plan by March for the establishment of the Transmission System Operator (TSO) and implementing measures to ensure functional independence of the National Transmission Company South Africa (NTCSA) during the transition period.

This remedial step has been listed following the publication of a revised unbundling plan by Eskom Holdings and the Department of Electricity and Energy.

The plan states that the NTCSA would be retained as an Eskom Holdings subsidiary and continue to own the transmission assets, while an independent TSO would be created outside of Eskom to be the system and market operator.

This model has been criticised as being suboptimal in relation to levelling the playing field for all generators and ensuring non-discriminatory access to the grid.

There are also concerns that the failure to fully separate the transmission assets by positioning then in the TSO could slow the delivery of the new grid infrastructure needed to connect new generators at a pace needed to match the decommissioning of aged coal units.

"Eskom's capital structure is complex, in particular the significant levels of debt across syndicated facilities, bilateral facilities and bonds incurred from a broad array of creditors.

"Ensuring no breach is triggered on Eskom's financings or at the Treasury through the government guarantees provided under the Guarantee Framework Agreement, has always been a core consideration in Eskom's separation process," Marokane wrote.

He added that a separation scenario involving the immediate and full legal separation of transmission assets would require major financial intervention from the ultimate shareholder, the South African government, "for a likely scenario of cross default to honour existing lender commitments based on an analysis by our transaction advisers".

"This estimate is based on about R400-billion in debt settlement that would become due, and for the asset transfer outside of Eskom Holdings of about R100-billion being required to purchase the shares in the NTCSA," Marokane outlined.

He argued further that the practice of separating "who owns the grid" from "who controls and operates the grid" was not novel, and in compliance with South Africa's Electricity Regulation Amendment Act.

Besides the Eskom restructuring matter, the Operation V...