Ramaphosa Backs Independent Grid Operator to Reform Power Sector

South Africa is preparing for one of its biggest electricity sector reforms after President Cyril Ramaphosa endorsed a landmark report that lays out the path for creating a fully independent state-owned Transmission System Operator (TSO). The proposal, developed by the Eskom Restructuring Task Team (ERTT), is expected to reshape the country's electricity market by opening the door to greater competition, encouraging new investment, improving energy security and helping deliver more affordable electricity for consumers and businesses.

Independent operator to reshape electricity market

The Presidency said the report recommends separating the future Transmission System Operator from Eskom, allowing it to operate independently as the backbone of a competitive wholesale electricity market. The new structure is expected to provide equal access to the national transmission network while supporting reliable and cost-effective electricity supply across the country.

President Ramaphosa said the report provides a practical framework for changing the architecture of South Africa's electricity sector as it continues to evolve, adding that strong alignment among key stakeholders strengthens the prospects for successful implementation.

Next phase focuses on detailed implementation

The restructuring process now moves into its second phase, which begins immediately and will run over the next three months. During this period, government and stakeholders will prepare a detailed implementation plan and final transaction structure for establishing the independent operator.

The report also recognises that rising municipal debt owed to Eskom remains one of the biggest risks facing the electricity sector. A dedicated working group will bring together existing initiatives designed to slow the growth of arrears and expand successful programmes, including stronger credit control measures, wider use of smart meters, Distribution Agency Agreements, tighter licence enforcement and continued implementation of municipal debt relief and electricity distribution reforms.

Immediate reforms to strengthen transmission independence

Several actions can begin without waiting for the new operator to be formally established. These include strengthening the operational independence of the National Transmission Company of South Africa (NTCSA), introducing the first steps toward separate transmission tariffs, clarifying payment arrangements in the future electricity market and creating safeguards that protect market participants from payment defaults.

The report also proposes stronger governance measures for the NTCSA. Eskom board members will not serve on the NTCSA board, while the NTCSA board will have full responsibility for appointing its chief executive and senior management. Decision-making on transmission network access will gradually move from Eskom to the NTCSA before eventually transferring to the independent TSO, while Eskom Distribution will continue managing distribution-level grid connections.