The head of Eskom’s transmission division says he was not surprised by the decision of the Energy Regulator to approve only one of the three licence applications made by the National Transmission Company South Africa (NTC), which is being unbundled from Eskom.

However, the Presidency has expressed concern that the decision to process the licence applications separately could delay the operationalisation of the independent grid company, which it views as a priority reform for the embattled sector.

The Energy Regulator, Nersa’s highest decision-making body, approved a 25-year transmission licence for NTC during its meeting on July 27, and indicated that the trading licence and an import/export licence, which had also been applied for in a bundled application, would be processed separately.

Nersa is yet to publish its reasons for decision and has not yet provided a firm timeframe for the processing of the other two licences, but heralded the decision to grant the transmission licence to NTC as a major “milestone”.

“The NTC’s independence is an important signal to all stakeholders, including investors, that they will have non-discriminatory access to the transmission system,” Nersa said in a statement.

Eskom group executive for transmission Segomoco Scheppers described Nersa’s decision to process the licences independently as an administrative one, which he did not view as presenting a major impediment to the operationalisation of the NTC.

Eskom has indicated previously that it is aiming to operationalise the NTC before the end of 2023 and has indicated that the three licences, along with lender consent and the appointment of a board, remained the main outstanding preconditions for the independent functioning of the new grid company, which will initially remain a wholly owned subsidiary of Eskom Holdings.

The board appointment has been said to be imminent, while lender consent was expected to follow on from the transfer of the three licences from Eskom to NTC.

Speaking alongside Scheppers at a regular weekly Energy Action Plan briefing, the Presidency’s Saul Musker underlined the importance of the NTC’s unbundling, which would be followed by the vertical separation of the generation and distribution entities.

He described having a “meaningfully independent” grid company as critical for levelling the playing field between Eskom and independent power producers (IPPs), as well as to ensure that transmission infrastructure investment was prioritised.

“Given the scale of the investment that is required in the transmission network over the next decade, having a transmission company that is able to focus on that roll-out is really crucial.”

It is anticipated that some R210-billion will have to be invested into some 14 000 km of power lines and more than 122 600 MVA of transformation capacity by 2032.

Musker stressed that Nersa had not rejected the other two licence applications, but said the Presidency was nevertheless troubled that the applications had not yet been approved.

“We are very concerned about that, because the NTC needs all three licences in order to operate and to fulfil its intended functions.

“[Given] the enormous importance of fully operationalising the NTC, our hope is that we would be able to resolve this sooner rather than later and have the remaining two licences in place alongside the other two conditions [lender consent and an independent board], so that there shouldn't be too much of a delay in establishing the entity,” Musker added.

Meanwhile, Electricity Minister Dr Kgosientsho Ramokgopa also dedicated a large portion of the briefing to the importance of transmission investment to overcoming South Africa’s current loadshedding crisis.

He also indicated that it was becoming increasingly apparent that the Eskom and fiscal balance sheets were insufficient to ensure grid investment at the “speed and scale” required to address capacity backlogs, particularly in the renewables-rich provinces of the Western, Eastern and Northern Cape.

Ramokgopa said various models were being assessed for mobilising private financing and skills in support of accelerated grid investment, while sustaining State ownership of the monopoly business.

He reported that a “healthy debate” was still ongoing regarding the options and that it was, thus, premature to outline what these were.