The Department of Public Enterprises (DPE) has confirmed that transitional arrangements are being put in place to ensure that the National Transmission Company of South Africa (NTCSA) will be able to play the role of a transmission system and market operator ahead of legislative changes catering for that role.

NTCSA is currently being established as a wholly owned subsidiary of Eskom Holdings, and acting DPE director-general Jacky Molisane told lawmakers in a briefing that the appointment of an independent board for the entity was under way, with a list of directors having been received by the department.

Acting deputy director-general Donald Nkadimeng added that NTCSA would receive a transmission licence from the National Energy Regulator of South Africa (Nersa), but that transitional arrangements would enable it to play the role of system operator and buyer ahead of the enactment of the Electricity Regulation Amendment (ERA) Bill.

Following delays, the ERA Bill was eventually formally introduced to Parliament on August 23, and it is understood that the Portfolio Committee on Mineral Resources and Energy will consider a programme for its passage soon.

The proposed legislation has been held up as a priority by both government and organised business, with its enactment seen as crucial for creating the framework for a sustainable electricity supply industry, which has been afflicted by loadshedding for some 15 years.

There are nevertheless concerns that there is too little time left ahead of the 2024 elections for both houses of Parliament to consider and approve the legislation.

The designation of the NTCSA as a buyer of energy from independent power producers (IPPs) was at an advanced stage, lawmakers were told, with an application for its designation as a buyer having been approved by the Department of Mineral Resources and Energy (DMRE) and being considered by Nersa.

Nkadimeng acknowledged that the operationalisation of the NTCSA was lagging the timeframe envisaged when the department first published a roadmap for Eskom’s restructuring in 2019, but said progress was dependent on several processes, some of which were outside of the utility’s control.

The transfer of assets, people and systems started in September 2023, while operational and financial separation had been implemented.

Eskom’s official plan was for NTCSA to commence trading by November 2023, but the timeline was dependent on the approval of the trading licence from Nersa and obtaining lender consent.

Nersa had, to date, approved only a licence for NTCSA to operate the transmission system, but full operationalisation depended on it also securing trading and import/export licences, which had not yet been approved.

Following a consultation phase, lenders were expected to provide their consent by the end of August, but Nkadimeng indicated that the deadline was unlikely to be met.

In a recent briefing, Eskom indicated that the NTCSA was expected to start trading by the first quarter of its next financial year, which began on April 1. The utility also indicated that the entity would provide non-discriminatory grid access to generators and manage the energy market.

Work was also under way to prepare the way with the National Treasury to enable NTCSA to raise capital for its expansion projects. Under a R254-billion debt-relief package, there is currently a moratorium in place on Eskom raising any new debt.

Despite the delays, the DPE stressed that significant progress had been made and indicated that the NTCSA’s operationalisation was one of four current departmental priorities. The other priorities were identified as being the finalisation of a National State-owned Company Bill and a holding company for State-owned companies, concluding a new roadmap for Transnet and securing a strategic equity partner for South African Airways.

Besides the licences and lender consent, the key next steps for the legal separation of NTCSA were listed as:

• The appointment of the permanent NTCSA board of directors;
• The NTCSA board passing special resolutions to effect the merger;
• The signing of the Government Support Framework Agreement with the National Treasury;
• The designation, with DMRE and Nersa approvals, of the NTCSA as buyer of electricity; and
• The conclusion of Eskom Holdings Generation as well as the IPP licences amendment to allow for NTCSA as buyer.

Meanwhile, the DPE indicated that Eskom still planned to operationalise the National Electricity Distribution Company of South Africa and the generation entities in March and establish the new Eskom Holding Company.

Deputy Minister Obed Bapela reiterated that the restructuring of Eskom did not equate to privatisation, stressing that all the entities would be wholly owned by Eskom Holdings that, in turn, was owned by government.