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Monday, 01 July 2024 22:33

Eskom subsidiary NTCSA officially commence trading.

By Lehlohonolo Lehana.

The National Transmission Company South Africa (NTSCA) has officially commenced trading, marking a significant milestone in its establishment as a separate and wholly-owned Eskom subsidiary.

Eskom announced the achievement in a joint statement with the NTCSA on Monday, 1 July 2024.

This marks a significant step in the Department of Public Enterprises' (DPE's) roadmap for Eskom towards a reformed electricity supply industry.

The NTCSA will own and operate South Africa's national transmission system, the system operator, the grid strengthening function, energy market services and the international trader.

In terms of current legislation, the NTCSA will play the role of the transmission system operator and buyer. It will assume additional roles once the Electricity Regulation Amendment (ERA) Bill is passed into law.

The NTCSA will trade with Eskom generation and independent power producers (IPPs) using the current industry framework.

The transition to a competitive electricity market will only begin after the ERA is gazetted, whereupon the NTCSA will assume the additional role of market operator. In this capacity, it will provide a platform for generators, consumers, traders and retailers to trade with one another.

"[The NTCSA] will focus on increasing the capacity of the national transmission grid to allow the connection of much-needed new power generation capacity. As a wholly owned subsidiary, it will operate under the direction of an independent board while providing open access to the electricity network, as envisaged during the unbundling process. We look forward to contributing to a more efficient and transparent electricity industry," Eskom board chairperson Mteto Nyati said on July 1.

The establishment of the NTCSA is a significant step in the electricity market structure reform, aiming to enhance efficiency and promote transparency. It will act as a catalyst for much-needed improvements and upgrades within the national electricity transmission infrastructure.

"Our commitment is to continue focusing on ensuring safe, reliable, and efficient operations while accelerating the development of an interconnected transmission system in line with our mandate. We will ensure non-discriminatory access to the transmission network and seek ways to accelerate the rollout of the transmission grid while fostering transparency and efficiency. Together, we look forward to shaping a dynamic electricity market," NTCSA board chairperson Priscillah Mabelane said.

On June 20, the merger was duly registered and placed on file by the Companies and Intellectual Properties Commission. Although Eskom has engaged with stakeholders, including government and lenders, additional engagements with employees and employee representatives on the legal separation process took place. 

The organisation has also notified creditors and suppliers of the merger to ensure no confusion.

The benefits of legal separation include a more competitive electricity market, open access to the transmission network, enhanced efficiency and the promotion of transparency.

The NTCSA will operate under three licences issued to it by the National Energy Regulator of South Africa.

The first of these licences deals with the operation of transmission facilities by operating and managing the transmission grid. The second deals with trading in terms of which it will buy energy from Eskom generators and IPPs as procured by the Energy Minister. The third licence deals with the import and export in terms of which the NTCSA will import and export energy as well as continue as the trading arm to and from the Southern African Power Pool.

Eskom's legal separation into three distinct entities of generation, distribution and transmission is aligned with its turnaround plan and the DPE roadmap.

Meanwhile the decision to establish a separate energy portfolio with the African National Congress's Dr Kgosientsho Ramokgopa as Minister and the Democratic Alliance's Samantha Graham as Deputy Minister has been welcomed by stakeholders and commentators alike.

There are already warnings, however, that the success of the new Electricity and Energy Ministry will be judged not only on ensuring a permanent end to loadshedding but on whether it is able to shepherd South Africa, justly, through the unfolding energy transition in a way that addresses not only the immediate threats to security of supply and affordability but also long-term sustainability and competitiveness.

Business Unity South Africa energy and enviroment policy director Happy Khambule welcomed the establishment of the standalone entity, which had been merged with mineral resources during the previous administration.

The ministry's separation, along with three others, has resulted in the number of Cabinet posts under the government of national unity rising to 32 from 30 and the number of Deputy Ministerial positions increasing to 43.

the University of Cape Town's Professor Anton Eberhard described the restructuring as a "good development", arguing that all the provisions of the Electricity Regulation Act (ERA), including electricity planning and procurement, will now fall under Ramokgopa, which should facilitate more effective implementation than was the case under Mineral Resources and Energy Minister Gwede Mantashe.

That said, he warned that "lumping" petroleum with Mantashe's new Mineral and Petroleum Resources Ministry could have unintended adverse consequences for the energy sector, especially for proposed gas-to-power projetcs that "might be prejudiced as a result".