SA Opens Power Grid to Private Investment, Launches R9bn Credit Guarantee Plan

The ITPs Programme marks a fundamental policy shift, enabling private sector participation in the development of high-voltage transmission lines—an area previously monopolized by Eskom.

In a historic move to modernize South Africa’s energy landscape and bridge the country’s infrastructure financing gap, government has officially launched the Independent Transmission Projects (ITPs) Programme, inviting private investment into the national electricity grid for the first time. The initiative, part of Operation Vulindlela Phase II, aims to accelerate the rollout of critical transmission infrastructure and underpin the transition to a more secure, competitive, and sustainable energy future.

First-Ever Private Participation in Transmission Infrastructure

The ITPs Programme marks a fundamental policy shift, enabling private sector participation in the development of high-voltage transmission lines—an area previously monopolized by Eskom. At its core, the programme seeks to enable the construction of over 14,000 km of new transmission lines over the next decade, as outlined in the Transmission Development Plan spearheaded by the newly established National Transmission Company of South Africa (NTCSA).

“This will support the efforts already underway by the NTCSA to implement the Transmission Development Plan,” said Deputy Minister of Finance Dr David Masondo, who delivered the keynote address at the launch of the Request for Pre-Qualification (RFQ) for ITPs in Johannesburg.

Reforming the Energy System Through Market Competition

The ITPs initiative dovetails with broader energy sector reforms, notably the creation of a competitive electricity market. This new framework will allow multiple energy generators and traders—including independent power producers—to compete in supplying electricity to consumers, thereby improving cost-efficiency and system reliability.

“We will not allow any vested interests to delay or obstruct this reform process, including Eskom itself,” asserted Masondo, affirming government’s firm stance on delivering long-term energy security.

The reforms are also critical to alleviating grid bottlenecks, particularly in areas where new renewable energy projects cannot connect due to insufficient transmission capacity.

Credit Guarantee Vehicle: A R9 Billion Innovation to Unlock Capital

To support the ITP rollout, the government, through National Treasury, has developed a Credit Guarantee Vehicle (CGV)—an innovative financing tool designed to crowd in private investment while managing fiscal risks.

The CGV will be incorporated as a private company in South Africa and regulated by the Prudential Authority. It will operate independently with its own balance sheet and governance structures, targeting a minimum credit rating of AAA.

“The Credit Guarantee Vehicle will issue a combination of payment and termination guarantees to project-based Special Purpose Vehicles (SPVs), substantially de-risking early-stage private investments in ITPs,” Masondo explained.

Key features of the CGV include:

• Initial capital raise of US$500 million (approx. R9 billion)

• National Treasury to contribute 20% first-loss capital, equating to US$100 million initially

• Formal letters of equity commitment from development partners expected by Q3 of 2025

• Full operational launch set for July 2026, to align with the ITP construction rollout

So far, 32 development partners have expressed strong interest, following a February 2025 outreach by Finance Minister Enoch Godongwana.

Addressing South Africa’s Infrastructure Funding Gap

The CGV comes at a crucial time. South Africa faces an estimated infrastructure shortfall of R3.5 to R4 trillion by 2025, translating to around R400 billion annually. The new vehicle is seen as a scalable solution to bridge this gap, not only in energy but in future applications across logistics, water, and other infrastructure sectors.

“This vehicle will also support efficient deployment of funding under the Just Energy Transition Partnership (JETP) and help meet our decarbonisation commitments,” said Masondo.

Enabling a Green, Competitive Energy Future

The ITP model is uniquely tailored to South Africa’s needs, balancing urgency, sustainability, and investor risk management. Once implemented, it will unlock thousands of megawatts of renewable energy, especially in regions currently constrained by inadequate grid infrastructure. It is expected to stimulate economic growth, generate jobs, and boost investor confidence in South Africa’s energy and infrastructure sectors.

“South Africa’s ITP programme, backed by credit guarantees, represents a globally innovative model. It will not only result in massive new investment in infrastructure but will enable thousands of megawatts of renewable energy capacity to be connected,” Masondo concluded.

The Road Ahead

The ITPs and the CGV are set to become cornerstones of South Africa’s future-facing development strategy, enabling the country to transition from energy scarcity to surplus, and from monopolized systems to inclusive, competitive markets. With policy certainty, private capital, and global partnerships aligned, South Africa is poised to power its future with resilience and reform at its core.