In a crucial step in the broader plan to restructure Eskom, the energy regulator has approved two licences that were outstanding for the establishment of the National Transmission Company of SA.
In July, the National Energy Regulator of SA (Nersa) approved the transmission licence application, which will allow the new company to act as the transmission operator for the national grid. On Monday, Nersa announced further approval for the company’s trading and import-export licences.
This is an important step in the restructuring of Eskom’s transmission division into a stand-alone entity. The establishment of the transmission company will allow for the liberalisation of the electricity trading market in SA.
It is also viewed as a vital move to attract private sector financing to upgrade and expand the transmission network, which will conservatively require an investment of about R210bn over the next 10 years.
According to Nersa, the trading licence will allow the new company to buy and sell electricity from Eskom power stations and independent power producers (IPPs).
The trading licence has been approved for five years “to allow for transition from the exclusive trading arrangement and incorporation of changes that may emanate from the Electricity Regulation Act amendment and price review processes,” Nersa said.
The import-export licence will allow the transmission company to continue with the cross-border power purchase and selling activities that are now being fulfilled by Eskom. It allows for the import and export of power within the Southern African Power Pool and for the transmission company to replace Eskom as the buyer for power generated by existing IPPs.
The transmission company was created at the end of 2021, but for it to start operating an independent board still has to be appointed for the company, and agreements must be put in place with Eskom’s existing lenders.
Eskom told Business Day it had asked for formal consent from all the lenders who needed to approve the change.
“[There are] ongoing interventions between lenders and Eskom to address lender concerns. It is an ongoing process and depends on the lender’s own internal processes,” Eskom said.
The department of public enterprises, which oversees the appointment of the board, said it was in the final stages of finalising the transmission company board. “Our intent is to make sure that the board is equipped with the right skills,” it said.
Public enterprises minister Pravin Gordhan said the granting of these licences was “a critical milestone in Eskom’s restructuring” and in “transforming the electricity industry”.
This would help “leverage new investment through public-private partnerships to resolve the country’s power crisis”, said Gordhan said.
“The granting of these licences means that the National Transmission Company of SA is ready to get down to business and bring a much-needed overhaul of our electricity industry. This is a significant milestone as it also paves the way for the procurement of power from across the region,” he said.
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