Cape Town - Public Enterprises Minister Pravin Gordhan has said the delays in unbundling transmission at power utility Eskom were due to “external dependencies”.
Gordhan was responding to parliamentary questions from DA leader John Steenhuisen when he asked about the progress made with the unbundling process and reasons for the delays after the commitment was made in 2019 to unbundle Eskom.
In his reply, Gordhan said Eskom was continuing to work on implementing the legal separation of the transmission entity, which remained a key strategic priority and aspect of Eskom’s turnaround plan envisaged under his department’s roadmap.
He said the corporatisation of transmission was completed in December 2021.
“A legally binding merger agreement was entered into between Eskom and its wholly-owned subsidiary, the National Transmission Company South Africa SOC Limited (NTCSA).
“The reasons for the delays in unbundling transmission substantively relate to external dependencies such as obtaining lenders’ consent, acquiring electricity licences, and designation of the transmission entity as a buyer,” he said.
Gordhan said the next step was to operationalise the NTCSA and that was subject to the satisfaction of certain suspensive conditions, which included, but were not limited to the National Energy Regulator of South Africa (Nersa) granting all applicable licences required for NTCSA to operate the transmission business and Eskom obtaining all applicable creditor consents to the transaction.
The minister indicated that future phases of the legal separation would be dependent on legislative changes, which were currently being driven by the Department of Mineral Resources and Energy and the Department of Public Enterprises.
“These changes include the amendment of the Electricity Regulation Act (Era) regarding licensing and the Electricity Pricing Policy (EPP) of the South African Electricity Supply Industry.
“The amended Electricity Regulation Act (Era) is expected to be in place during 2023,” he said.
Gordhan said efforts to accelerate the addition of new transmission capacity through expansion of the grid were being addressed through the implementation of the transmission development plan (TDP) with the support of the government.
He also said since the launch of the DMRE Independent Power Producer (IPP) programmes, close to 6.1 gigawatt of new generation capacity has already been integrated into the power system.
“There have been IPPs that participated in the private procurement process, who quickly secured grid capacity, mainly in the Western, Eastern and Northern Cape areas.
“The transmission network capacity in these areas has been taken up, as per grid code requirements, which require Eskom to provide non-discriminatory open access to the grid.
“This has resulted in network constraints, and this will require substantial augmentations before new generation capacity can be connected to the system,” he said.
Gordhan said the transmission development plan identified the new infrastructure that would be required to implement the IRP 2019 and Eskom’s 2035 corporate strategy.
“However, it takes time to establish new transmission infrastructure (especially the building of long lines and substations) mainly due to servitude acquisitions and constructability challenges.
“Eskom is aware of these challenges and is making every effort to expedite the build programme by engaging key stakeholders in government, as well as the private sector,” Gordhan said.