Major win for Eskom’s split into three companies

The National Energy Regulator of South Africa (Nersa) has issued a licence for the National Transmission Company South Africa (NTCSA) to operate the country’s transmission system.

Eskom welcomed the decision in a statement on Monday, 31 July 2023, and it marks a major victory for the power utility’s split into three entities — Generation, Distribution, and Transmission.

“The Transmission licence decision marks a significant milestone in the legal separation process of the Transmission Division,” said Eskom.

It said the legal separation of Eskom into three companies is a key aspect and strategic objective of Eskom’s Turnaround Plan, as envisaged in the Department of Public Enterprises’ “Roadmap for Eskom in a reformed electricity supply industry”.

Eskom added that NTCSA has also applied for a trading and import/export licence currently under consideration at Nersa.

“The granting of the requisite operating licences to NTCSA is one of the key dependencies required to enable the operationalisation of the NTCSA,” it added.

The Department of Public Enterprises recently estimated that the NTCSA would be up and running by December 2023. Its establishment could allow independent power producers (IPPs) to compete directly with Eskom’s generation division.

President Cyril Ramaphosa announced the unbundling of Eskom into three separate entities in his 2019 State of the Nation address.

The project aims to make Eskom more manageable and encourage more private sector participation in electricity production.

Department of Public Enterprises spokesperson Ellis Mnyandu said the NTCSA would act as a single buyer with purchasing power from Eskom generation and IPPs that sell to Eskom distribution, municipalities, and large power users.

“The national transmission entity’s core functions will include balancing electricity supply and demand in real-time, dispatching the generators according to least-cost merit order principles, providing open access in a fair and equitable manner to the transmission network and acting as an unbiased electricity market broker,” he said.

It is expected to buy 218,000GWh of power annually, of which 77% will come from Eskom’s power plants, 19% from IPPs and 4% through electricity importers.

In turn, NTSCA will transmit 5% of the 212,000 GWh it expects to sell, and the rest will be sold within South Africa.

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Major win for Eskom’s split into three companies