NTCSA says independent transmission projects must not reflect as balance-sheet liability

The head of the National Transmission Company South Africa (NTCSA) has confirmed that the entity’s board will insist that any independent transmission projects (ITPs) procured in the coming years should not reflect as a liability on the new entity’s balance sheet.

However, interim CEO Segomoco Scheppers tells Engineering News that he remains confident that such a framework will be found in the coming months, and that an ITP pilot procurement programme will be launched next year as has been signalled by government.

The Ministry of Electricity and Energy and the National Treasury view the procurement of ITPs as key to accelerating the implementation of the NTCSA’s ambitious Transmission Development Plan (TDP).

The TDP involves the building of 14 500 km of new transmission lines and the addition of 210 transformers by 2034, which are required to integrate 56 GW of new generation. It represents a fivefold increase in delivery over the next ten years compared with the previous decade and it has been estimated that it could involve investments worth some R390-billion.

In the Medium-Term Budget Policy Statement, the National Treasury confirmed that a pilot ITP procurement process was being prepared for the second half of 2025 using a build-operate-and-transfer (BOT) model and supported by a new credit-guarantee vehicle.

The World Bank’s Multilateral Investment Guarantee Agency has been playing a central role in designing the instrument, which will seek to mimic the role that government guarantees conventionally play to de-risk projects for ITP developers but without exposing the national balance sheet to yet more contingent liabilities.

It has also been confirmed that the Independent Power Producer Office, which has overseen the public procurement of more than 7 GW of operational renewable-energy capacity since 2011, will oversee the pilot programme to procure South Africa’s first ITPs.

Work is also under way to finalise the regulations for the publication of the Ministerial determinations needed to facilitate the procurement process, as well as the selection of mature ITP prospects from within the NTCSA’s existing TDP pipeline.

However, Scheppers says the credit-guarantee vehicle is not designed to shield the NTCSA’s balance sheet.

Additional work is, thus, still needed to finalise a design that is acceptable to the entity, whose board is said to be reluctant to “encumber” an already-stretched balance sheet further.

The board has, thus, endorsed only a so-called build-and-transfer solution, which is described as engineering, procurement, and construction (EPC) with finance, while management continues to explore the BOT-type solutions that are more typical globally.

“One of the pegs that has been placed in the ground by the board is that the ITPs should be properly off-balance-sheet,” Scheepers tells Engineering News.

“This is something that government has accepted and National Treasury has said they will look at solutions.”

Meanwhile, the NTCSA is pressing ahead with its own-build initiatives using a combination of traditional contracting models, including EPC contracting, which was introduced recently.

“NTCSA has identified 47 priority projects that can be fast-tracked to accelerate TDP delivery.

“These projects are expected to unlock 37 GW of new generation capacity by 2034.”

Besides conventional investments into powerlines and transformers, NTCSA is also preparing to start adding synchronous condensers to provide inertia, voltage support and short-circuit power as the penetration of inverter-based renewables rises.

Seven synchronous-condenser sites have been selected, including Gromis, Aggeneis, Ferrum, Gamma, Koruson, Grassridge and Vuyani.

The entity’s new corporate plan, which is under development, is expected to cater for the addition of the first synchronous condensers, with research under way to assess whether generators from decommissioned coal units could be repurposed to play the role.

“We have appointed an owners engineer to assist with this phase of the work because this is obviously something totally new to us,” Scheppers reports.