The National Energy Regulator of South Africa (Nersa) has approved the two licence applications required for the operationalisation of the National Transmission Company of South Africa (NTCSA), which is in the process of being established as an independent unbundled division of Eskom Holdings.

The approvals of the trading, as well as the import and export licences were made by the Energy Regulator, Nersa’s highest decision-making body, at a special meeting held on September 14.

The decisions follow on from the Energy Regulator’s approval of a 25-year transmission licence for NTCSA, which was confirmed on July 27.

At the time, the decision to grant only one of the licences required raised concern that the unbundling could be further delayed, given that all three licences had to be transferred from Eskom for the NTCSA to be operationalised.

The licences formed part of three outstanding conditions for operationalisation, with the other two being that of lender consent for the separation of the NTCSA from Eskom and the establishment of an independent board.

Eskom has confirmed that it has been in dialogue with lenders over securing their consent for the unbundling and the allocation of debt to the separate entities of generation, transmission and distribution, while Public Enterprises Minister Pravin Gordhan is said to be in possession of names for possible appointments to the NTCSA board.

Nersa said that NTCSA had been granted a trading licence for a period of five years, as a transitional arrangement ahead of the amendment of the Electricity Regulation Act, as well as price review processes.

Parliament’s Portfolio Committee on Mineral Resources and Energy has officially invited public comment on the Electricity Regulation Amendment Bill [B23 – 2023], which includes proposed amendments to the 2006 Act.

One of the amendments relates to the assigning of duties, powers and functions to the Transmission System Operator (TSO) to the NTCSA, as well as a definition of the role of the TSO.

The five-year trading licence empowers NTCSA to buy and sell electricity from Eskom power stations; independent power producers (IPPs) under section 34 determinations including cross-border electricity imports; and IPP generators under the Eskom Holdings programmes, such as short-term power purchases only to Eskom Distribution.

The approval of the import and export licence, meanwhile, will facilitate electricity trade conducted through the Southern African Power Pool (SAPP), as well as wheeling on behalf of cross-border utilities. 

“The approval will enable the continuation of import and export activities presently fulfilled by Eskom Holdings.

“Imports and exports are transacted based on power purchase agreements and power sales agreements entered into with cross-border utilities, cross-border generators, as well as via the SAPP competitive markets.

“The transmission network operated by the NTCSA will be used for import and export activities,” Nersa stated.

The Energy Regulator also confirmed its approval of Eskom’s Standard Offer Power Purchase Agreement and its Emergency Power Procurement Programme Power Purchase Agreement.

Gordhan welcomed the granting of the two additional licences, describing it as a "critical milestone in Eskom’s restructuring and in the operationalisation of the NTCSA", but made no reference to the pending appointment of a board.

He confirmed that the NTCSA would operate the transmission system and perform the following roles, including: Transmission Network Service Provider, System Operator, Transmission System Planner; and Grid Code Secretariat.

“The granting of these licences means that the NTCSA is ready to get down to business and bring a much-needed overhaul of our electricity industry," Gordhan said.