South Africa’s Energy Regulator has taken another set of decisions opening the way for the operationalisation of a separate grid company in South Africa ahead of the far-reaching legislative changes approved by the National Assembly last week.

On March 11, the Energy Regulator consented to the transfer of powers and duties, from Eskom Holdings to the National Transmission Company South Africa (NTCSA), relating to power purchase agreements with independent power producers (IPPs) concluded in line with Section 34 of Electricity Regulation Act (ERA) of 2006.

The Energy Regulator also sanctioned the issuance of a cost recovery letter to the NTCSA for Section 34 IPP projects, and the amendment of the IPP’s generation licences to designate the NTCSA as the buyer in terms of Section 16(1)(d) of the ERA, replacing Eskom Holdings in this role.

The NTCSA’s trading licence would be amended accordingly, the National Energy Regulator of South Africa (Nersa) said in a statement.

The decisions were in line with an application made to Nersa by Eskom, which is unbundling its generation, transmission, and distribution businesses in line with the ‘Roadmap for Eskom in a reformed electricity supply industry’ published by the Department of Public Enterprises in 2019.

The transition of the buyer role for Section 34 IPPs from Eskom to the NTCSA was a critical component of this process, Nersa noted in a statement published only days after lawmakers approved amendments to the ERA, which made provision for the establishment of a transmission system operator that was separate from Eskom.

It is unlikely that the amendments, which still need to be considered by the National Council of Provinces, will be signed into law by the President before the May 29 elections. Nevertheless, they signal that South Africa is moving ahead with a major overhaul of the architecture of an electricity supply industry that has hitherto been monopolised by Eskom.

In February, Nersa officially published the three licences required for the operationalisation of the NTCSA, having approved their transfer from Eskom in 2023.