Eskom turnaround hits major milestone

The National Transmission Company South Africa (NTCSA) has officially commenced trading, marking a significant step in the unbundling of Eskom as part of the national power utility’s turnaround process.

The milestone marks the NTCSA’s establishment as a separate, distinct, and wholly-owned subsidiary of Eskom Holdings.

As part of the unbundling, the NTCSA will own and operate the country’s national transmission system, the System Operator, the grid strengthening function, energy market services and the International Trader.

In terms of current legislation, NTCSA will play the role of the Transmission System Operator and buyer, Eskom said.

It will also 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 commence after the ERA is gazetted, and NTCSA will assume the additional role of Market Operator,” the group said.

“In this capacity, it will provide a platform for generators, consumers, traders, and retailers to trade with one another, as is the case in leading countries around the world.”

Eskom said the establishment of the NTCSA is another 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.

On 20 June 2024, the merger was registered and placed on file by the Companies and Intellectual Properties Commission (CIPC) in terms of Section 116(3) of the Companies Act, 2008.

How will NTCSA operate:

• The NTCSA will operate under the three following licences issued to it by the National Energy Regulator of South Africa (NERSA):
• The operation of transmission facilities by operating and managing the transmission grid.
• Trading in terms of which it will buy energy from Eskom generators and IPPs as procured by the Minister of Mineral Resource and Energy.
• Import and export in terms of which it will import and export energy as well as continue as the trading arm to and from the Southern African Power Pool (SAPP)

Among the changes that are hitting Eskom in its turnaround is a shift in government leadership.

Following President Cyril Ramahosa’s announcement of the new executive on Sunday (30 June), the Department of Public Enterprises will cease to be its own full portfolio, with the plan to ultimately eliminate it entirely.

According to Ramaphosa, there will no longer be a Ministry of Public Enterprises.

“The coordination of the relevant public enterprises will be located in the Presidency during the process of implementing a new shareholder model,” he said.

The broader plan for Eskom and all major public enterprises in South Africa is for them to ultimately answer to their respective portfolios (e.g., the Department of Energy and Electricity for Eskom, under minister Kgosientsho Ramokgopa).

Administratively, however, they will fall under a new state-owned holding company with the state as the sole shareholder – called the State Asset Management SOC Ltd.

This is outlined in the National State Enterprises Bill (NSEB). which would have commercial SOEs—such as Eskom and Transnet—as subsidiaries of the holding company.

However, the plan for SOEs hit a snag in the past month, with Parliament’s latest term dissolving on 21 May 2024 ahead of the national election. As the bill had not been fully processed, it lapsed in terms of National Assembly rule 333(2).

A lapsed bill can be revived via a house resolution. Until then, the DPE’s portfolio will be managed within the presidency.

Read: The five men who improved Eskom and stopped load-shedding