About an hour and a half into the state of the nation address, President Cyril Ramaphosa was still only on task three of his "five most urgent tasks". Fortunately, he sped up and finished just shy of two hours after he began. His charm and mastery of the subject matter meant Ramaphosa's second state of the nation wasn't too tedious. And there was evidence of fresh policy thinking - two years of free and compulsory early childhood education, a new specialised unit in the National Prosecuting Authority, a plan to lift SA's ranking on the World Bank's doing-business index from 82nd to the top half of the table. There were clear commitments, too, to measures to get economic growth going again, and to rebuild key institutions.
Yet the length of the speech seemed to reflect the compromise politics behind it, and the difficulty of getting the cabinet to agree on really tough decisions or trade-offs. This was nowhere more evident than in what Ramaphosa had to say about the economic issue that was top of mind for the markets - Eskom.
As expected, big announcements were made. But what they mean exactly could puzzle us for some time. Ramaphosa acknowledged that Eskom is in crisis and could severely damage the economy, and there is a need for bold decisions that could have painful consequences. At the same time there is a need to minimise adverse economic costs to consumers and taxpayers - and the fiscal framework must be safeguarded. He also talked about the need to pay attention to the rights of Eskom's funders and the need to take urgent steps to cut Eskom's costs, but without saying which costs and how they might be reduced (and who would take pain).
Crucially for the markets he confirmed that the government will support Eskom's balance sheet - but, intriguingly, that this will be done in a way that will not burden the fiscus (with extra debt). Details will come in the budget but it seems that the government will bail out Eskom, which wants the government to take over R100bn of Eskom's R440bn debt because it cannot afford to pay the interest on it. But what might such a bailout look like, and is it a bailout at all if it's fiscally neutral? The whole point, surely, is that the government should take over the responsibility of paying at least part of the interest that Eskom doesn't have the cash flow to cover, and that means money from the public purse, regardless of whether and how the debt is engineered off Eskom's balance sheet.
There are various versions floating about of the planned restructuring of Eskom's debt - shifting it into a special-purpose vehicle, or getting development finance institutions to take back their Eskom loans, or extending guarantees - and the idea seems to be a mix of bailout and tariff increases to get the utility out of its financial hole, for now. The economy clearly cannot afford a cumulative tariff increase of 70% over the next three years, which is what Eskom is effectively asking Nersa for. Costs need to be cut and the reliability of supply restored, and the market was looking for clarity on those too.
Ramaphosa announced the splitting of Eskom into generation, transmission and distribution, still under Eskom Holdings, to ensure costs can be isolated and operational responsibility given to each. This "new business model" will no doubt be welcomed by business. But it is likely to take at least three years to implement, so it is no solution to Eskom's immediate operational crisis or its bloated cost base - and far from fixing Eskom's operations, the disruptive effect in the short term could be to make them worse.
Ramaphosa mentioned hiring good people at state-owned entities. He talked about strategic equity partners and selling nonstrategic state-owned assets, if necessary - but definitely not strategic ones, whatever that means. There's evidently some bold thinking going on. But the politics look as complicated as ever; the outcome is as yet entirely unclear...