The National Energy Regulator of South Africa (Nersa) has taken a significant step towards the operationalization of the National Transmission Company South Africa (NTCSA) by formally publishing the three required licenses on its website. These licenses were approved for transfer from Eskom to NTCSA in the previous year, marking a crucial milestone in the restructuring of South Africa’s energy sector.
The NTCSA is in the process of becoming an independent subsidiary of Eskom Holdings as part of a comprehensive restructuring initiative launched in 2019. The goal of this restructuring is to break up the vertically integrated utility into three distinct businesses: transmission, distribution, and generation.
The licensing process has been conducted in accordance with the existing Electricity Regulation Act, but it also aligns with proposed amendments currently under consideration by lawmakers. These amendments aim to create a more competitive market structure in the energy sector.
The separation of NTCSA has been prioritized ahead of the unbundling of distribution and generation. This prioritization is due to the significance of having an independent transmission, system, and market operator. Such independence is essential for creating a level playing field between Eskom generators and independent power producers.
NTCSA is scheduled to commence operations at the beginning of its new financial year on April 1. Its inaugural board, chaired by Priscillah Mabelane, was appointed on January 9. The remaining key condition precedent for operationalization is securing bondholder consent. On February 1, Nersa officially published NTCSA’s transmission license, which was issued on July 27, 2023, as well as its trading and import/export licenses, issued on September 14, 2023.
Under the terms of the transmission license, NTCSA is authorized to operate the transmission facility and take on various roles, including Transmission Network Service Provider, System Operator, Transmission System Planner, and Grid Code Secretariat. The trading and import/export licenses enable NTCSA to engage in trading activities with generators and customers within South Africa and engage in regional import and export activities, including through the Southern African Power Pool.
These licenses have substantial validity periods. The transmission and import/export licenses are valid for 25 years from the date of issuance, while the trading license has a validity period of five years. These developments represent significant progress in the transformation of South Africa’s energy landscape and the establishment of a more competitive energy market.
