Business Leadership South Africa (BLSA) CEO Busi Mavuso has called on government to publish a firm timetable for private investment in the country’s electricity grid. She said the plan should include clear steps all the way to financial close.
Her call follows a delay to the independent transmission projects programme. The Department of Electricity and Energy and National Treasury moved the request for proposals from the third quarter of this year to the second quarter of next year.
“The delay to the independent transmission projects programme is an unfortunate slippage, but it is better than rushing to market with a procurement that fails or comes in overpriced,” Mavuso wrote.
The programme aims to bring in large private investment to expand the grid. This would connect more electricity generation to users across the country.
Mavuso said the delay gives government time to build up the institutions that must run the tender. She warned that a failed process could lead to more delays and higher costs if bidders could not judge the risks properly.
She welcomed a new credit guarantee vehicle set up by National Treasury, the World Bank, FSD Africa and the Development Bank of Southern Africa. It is meant to protect investors from credit risks linked to the National Transmission Company South Africa.
That company is being separated from Eskom, together with its transmission assets. It is expected to become the Independent Transmission System and Market Operator, and will deal directly with investors who build grid infrastructure.
Because the new operator does not yet have its own balance sheet or credit history, the guarantee vehicle could give investors the confidence to commit billions of rand. The vehicle was incorporated in August.
Mavuso said the steps after the request for proposals are still unclear. These include bid evaluation, talks with winning bidders and financial close, when building can start.
“On the current trajectory, the new grid infrastructure is unlikely to be in operation by the end of the decade,” she wrote. “A clear timetable for that whole process now would help manage expectations and enable planning.”
She said a lack of grid capacity is already holding back new power generation. Electricity cannot always be moved from areas where it is cheaper to make to the places where it is needed.
According to Mavuso, BLSA and Eskom agree on finishing the transfer of Eskom’s transmission assets to the independent operator. She said this would make clear which body investors will deal with.
The first phase of grid investment covers 1,164 kilometres of new power lines. The National Transmission Company plans to build 14,500 kilometres by 2034, and Mavuso said more tenders would need to follow quickly.
She also asked for a timetable for other reforms, including the South African Wholesale Electricity Market. She said this market is important for allowing competition in the electricity sector.
Mavuso said banks and fund managers will be important investors in the grid. She added that reliable power and fair prices help companies invest, grow and create jobs.
Source: this article is based on reporting by Green Building Africa. Image: Green Building Africa. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.