Eskom’s transmission unit gets green light from regulator

by Victor Adetimilehin

South Africa’s power utility Eskom has moved a step closer to unbundling its transmission division, after the national energy regulator approved two key licences for the new entity.

The National Energy Regulator of South Africa (Nersa) granted a trading licence and an import and export licence to the National Transmission Company of South Africa (NTCSA), which is being established as an independent unit within Eskom Holdings.

The licences will enable NTCSA to buy and sell electricity from various sources, including Eskom’s own power stations, independent power producers (IPPs), and cross-border utilities. The licences will also allow NTCSA to operate the transmission network and facilitate electricity trade through the Southern African Power Pool (SAPP).

The approvals follow Nersa’s decision in July to grant a 25-year transmission licence to NTCSA, which was one of the conditions for operationalising the new entity.

The other two conditions are securing lender consent for the separation of NTCSA from Eskom and appointing an independent board. Eskom has said it is in talks with its creditors over the allocation of debt to the three unbundled divisions of generation, transmission and distribution. Public Enterprises Minister Pravin Gordhan is reportedly in charge of selecting the board members for NTCSA.

The unbundling of Eskom is part of the government’s plan to reform the electricity sector and address the chronic power shortages that have plagued the country for years. The plan also involves opening up the market to more IPPs, especially those using renewable energy sources.

Eskom’s transmission unit is seen as a key player in ensuring a stable and secure supply of electricity, as well as creating a level playing field for all generators and customers. The unit is also expected to improve Eskom’s financial viability and governance.

Nersa said it granted the trading licence for a period of five years, as a transitional arrangement ahead of the amendment of the Electricity Regulation Act, which will define the role and functions of the transmission system operator (TSO).

The regulator also approved Eskom’s standard offer power purchase agreement and its emergency power procurement programme power purchase agreement, which are aimed at increasing the available generation capacity in the short term.

Eskom’s chief executive Andre de Ruyter welcomed Nersa’s decisions and said they were “a significant milestone” in the implementation of the unbundling process.

He said Eskom was committed to working with all stakeholders to ensure a successful transition to a more efficient and sustainable electricity industry.

Source: Mining Weekly

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