Eskom spinoff plan raises credit profile concerns

South Africa’s plan to split power utility Eskom into separate units could weaken the state-owned electricity utility’s risk profile because its transmission unit accounts for a major share of its earnings, according to a bondholder and a ratings agency.

The state is unbundling Eskom into generation, distribution, and transmission units in a frequently delayed plan to open the grid to electricity trading and private generation. South African President Cyril Ramaphosa late Monday said the report of a task team established to advise on how to create an independent Transmission System Operator is now expected at the end of June, weeks after its original deadline.

The sticking point is over whether transmission assets would remain within Eskom or be fully separated into the TSO, which is what Ramaphosa announced in February. That outcome means the power utility, which still generates the bulk of the southern African nation’s electricity with aging coal-fired