Methodical progress is being made ahead of the launch, later this year, of South Africa’s inaugural procurement of independent transmission projects (ITPs).

Following a market-sounding exercise earlier in the year, Electricity and Energy Minister Dr Kgosientsho Ramokgopa published a Ministerial determination for the procurement of the “first phase” of the ITPs.

The phase involves 1 164 km of 400 kV powerlines and 2 630 MVA of transformers across seven projects in the Northern Cape (four), North West (two) and Gauteng (one) provinces.

Together, the projects are expected to unlock 3 222 MW of additional renewable-energy generation when they enter into commercial operation in stages during 2029 and 2030.

The projects have been selected from the National Transmission Company South Africa’s (NTCSA’s) Transmission Development Plan and are all at an advanced stage of development with regard to servitude acquisition and environmental approvals.

The Minister has also released draft regulations for a 30-day public comment period.

Once finalised, these regulations will outline the terms of transmission service agreements between the ITP and the buyer, which will be the NTCSA.

They will also contain the cost-recovery mechanism to be used to enable the NTCSA to pay the ITP for the financing, construction, operation and maintenance of the infrastructure over the concession period, while earning a “fair” return.

While the NTCSA has proved something of a reluctant participant, there are signs that it is starting to accept the logic that neither it nor its shareholder (government) have the financial firepower to clear the investment backlog.

The blacklog has been created largely because funding approved for grid investment has hitherto been diverted to help Eskom’s ailing generation unit. The NTCSA has also reportedly appointed an ITP project manager to facilitate the programme.

There is some way to go, however, with the preferred procurement model yet to be determined, and it is here that the NTCSA could still require some coaxing, given its position that ITPs should not reflect as a balance-sheet liability.

It is unclear what that will mean, particularly given that the market-sounding exercise pointed to there being private-sector appetite for some form of build, operate, own and transfer model or build, operate, transfer model.

Should these issues be resolved, government plans to pursue a two-stage procurement process, with a request for qualifications in July aimed at prequalifying bidders ahead of the November launch of a full-blown request for proposals.

In parallel, government is working with the World Bank to prepare for the launch, in early 2026, of a new credit guarantee vehicle, to help derisk the projects for investors without further burdening the fiscus.

The blended-finance instrument will act as a substitute for sovereign guarantees in covering payment and termination risks by leveraging development, multilateral development bank, political-risk insurance and grant finance.

The idea is to pilot its deployment during the first ITP phase before extending it to other infrastructure areas, with some $500-billion being targeted at its initial start-up.