South Africa Energy ESKOM unbundling update

Following the approval of their transfer from Eskom to the National Transmission Company South Africa (NTCSA) in 2023, the National Energy Regulator of South Africa (Nersa) has now formally published on its website the three licenses needed for the NTCSA to begin operations. As part of a comprehensive restructuring process that was started in 2019 to unbundle the vertically integrated utility into three distinct companies of transmission, distribution, and generation, the NTCSA is currently being founded as an independent subsidiary of Eskom Holdings. The transfer is in line with reforms that are presently being considered by parliamentarians with the goal of enabling a more competitive market structure, even if the licensing has been executed under the current Electricity Regulation Act.

The NTCSA’s separation has also been given priority over distribution, whose unbundling is likewise quite advanced, and generation because it is crucial to have an independent market, transmission, and system operator to level the playing field between independent power producers and Eskom generators. The NTCSA is scheduled to go into operation on April 1, 2024. Its inaugural board, led by Priscillah Mabelane, was selected on January 9th. The final prerequisite for operationalization is the bondholders’ permission, which is expected to be secured soon.

Under the conditions of the transmission license, the NTCSA is permitted to run the transmission facility and perform the functions of Grid Code Secretariat, Transmission System Planner, System Operator, and Transmission Network Service Provider. The NTCSA can also import and export regionally, including through the Southern African Power Pool, and trade with South African generators and customers through the trading and import and export licenses. While the trade license is only valid for five years, the transmission, import, and export licenses are valid for 25 years from the date of issuance.

U.S. energy companies are highly regarded for good quality products, their innovative technologies that go above and beyond the required International Standards, and after-sale service and training, making them competitive in South Africa’s energy market. Furthermore, the South African energy landscape highly regards well-proven technologies from developed markets and this fits perfectly with the caliber of U.S companies that have accumulated a good track record over the years. These include opportunities for U.S. companies to participate in on the grid infrastructure projects that NTCSA will prioritize to improve the national grid capacity. The national grid is currently facing constraints to accommodate up to 11GW under the Renewable Energy Independent Power Producers Program that is being implemented through 2030. 

The South African Cabinet in December 2023 also endorsed the creation of an Independent Transmission Projects Office (ITPO) which will be responsible for looking at Independent Transmission Projects to finance, construct, and operate defined transmission infrastructure to be made available to NTCSA as a system operator. 

For more information contact: U.S. Commercial Service; U.S. Embassy-South Africa Email: Office.Johannesburg@trade.gov;  Phone: +27 11 290 3192
Energy interests: Mlamli Mjambana at Mlamli.Mjambana@trade.gov