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Transforming South Africa’s Energy Landscape

by Oluwatosin Alabi

In a pivotal development, the National Energy Regulator of South Africa (Nersa) has granted essential licenses, marking a significant step toward establishing the National Transmission Company of South Africa (NTCSA).

Nersa’s Key Approvals

The decision-making panel at Nersa convened a special meeting on September 14 and approved two crucial licenses: one for trading and another for import-export activities. This decision builds upon the foundation laid earlier this year when NTCSA received a 25-year transmission license on July 27.

Addressing Operational Concerns

While the previous license was a positive move, concerns lingered regarding the timeline for NTCSA’s operationalization. For NTCSA to function independently, it needed all three licenses previously held by Eskom.

Navigating Complex Conditions

To navigate this process, three primary conditions had to be met: obtaining lender approval for NTCSA’s separation from Eskom, establishing an independent board, and transferring these licenses. Eskom has actively engaged with lenders to ensure a smooth unbundling process and debt allocation among its divisions—generation, transmission, and distribution. Additionally, Public Enterprises Minister Pravin Gordhan is reportedly vetting potential board members for NTCSA.

Transitional Trading License

Amid these developments, Nersa also unveiled a transitional five-year trading license for NTCSA, anticipating amendments to the Electricity Regulation Act. These amendments will undergo scrutiny during upcoming price review processes.

Parliament’s Involvement

South Africa’s Parliament is actively participating in this transformation. They’ve initiated a call for public opinions on the Electricity Regulation Amendment Bill [B23 – 2023]. One significant proposal within the bill is the delegation of responsibilities to the Transmission System Operator (TSO) within NTCSA, providing a clearer delineation of the TSO’s role.

Empowering NTCSA

This newly-issued five-year trading license empowers NTCSA to engage in electricity trade with various stakeholders, including Eskom power stations, cross-border electricity imports, and independent power producers (IPPs) involved in various schemes.

Facilitating Cross-Border Operations

Furthermore, the approved import-export license will enhance electricity trade through the Southern African Power Pool (SAPP), ensuring seamless cross-border utility operations.

Ensuring Continuity

“Nersa’s approval underscores the continuity of import and export operations, primarily managed by Eskom Holdings. These transactions revolve around power purchase and sales agreements with multiple entities, including cross-border utilities and generators,” clarified Nersa.

Endorsing Power Purchase Agreements

In addition to these transformative licenses, Nersa has also endorsed Eskom’s Power Purchase Agreements, signifying South Africa’s commitment to fostering a robust and dynamic energy sector.

These developments will have far-reaching implications for the nation’s energy landscape, opening doors to enhanced electricity trade and efficient cross-border operations in the region.

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