01-08-2025
Government launches R440bn private transmission gamble to end load shedding
Electricity Minister Kgosientsho Ramokgopa and the National Treasury have unveiled an ambitious plan to build 14,500km of transmission lines and 133,000 megavolt-amperes of transformer capacity by 2034 at an estimated cost of R440bn.
At the JSE on Thursday, Electricity Minister Kgosientsho Ramokgopa launched the Request for Pre-Qualifications (RFP) of a high-stakes transmission programme aimed squarely at ending load shedding.
South Africa's energy problem is no longer just about generation. The real choke point lies in transmission capacity, with tens of gigawatts of renewable energy trapped behind constrained networks.
The Transmission Development Plan (TDP) is meant to address this, adding 14,500km of lines and 133,000 megavolt-amperes of transformer capacity by 2034. Without this build-out, energy challenges will remain no matter how much is generated.
Industry bodies such as the South African Photovoltaic Industry Association agree. Its CEO, Dr Rethabile Melamu, said: 'The future of South Africa's energy system relies not just on how much we build, but on how efficiently we connect it to the grid.'
What's in a Credit Guarantee Vehicle?
At the heart of the plan is a Credit Guarantee Vehicle (CGV) that de-risks private investment without creating new state guarantees. In simple terms, it provides payment and termination guarantees to private funders if a large infrastructure project stalls. This makes investing in the grid more secure.
The CGV targets an initial $500-million (around R9-billion) raise, with the National Treasury providing 20% first-loss capital (about $100-million, roughly R2-billion via a World Bank loan), scalable to $500-million if needed.
It will operate as a private non-life insurer under the Prudential Authority, aiming for an AAA rating, and launch is planned for July 2026. Premiums will be recovered through the electricity tariff. The initial focus will be on energy transmission, with potential expansion to logistics and water.
Speaking at the RFP launch, Deputy Finance Minister David Masondo said the introduction of independent transmission projects was a key objective of Operation Vulindlela Phase II, and would play an important role in the broader reform of South Africa's energy system.
'This reform includes the introduction of a competitive electricity market, which will allow multiple generators and traders to compete to provide electricity to consumers at the lowest cost and with the greatest efficiency,' he said.
'The reform of our energy system is advancing rapidly, and our commitment in this regard remains unwavering. We will not allow any vested interests to delay or obstruct this reform process, including Eskom itself.'
South Africa urgently needs to resolve its transmission crisis. Load shedding has disrupted daily life and exacted a heavy toll on jobs, investment and GDP.
A Cresco Energy Market Transitions report released by Standard Bank Corporate and Investment Banking in June warned that grid connections and transmission delays, rather than tariffs, were now the main roadblock to an energy secure future. This is confirmed by the fact that several renewable projects from Bid Window 7 are stuck waiting for grid access, threatening investor confidence and project timelines as companies better understand their round-the-clock power needs.
But beware the tale of Karpowership
On 31 July, after a three-year legal battle, the Gauteng Division of the High Court in Pretoria set aside the generation licences that the energy regulator, Nersa, had awarded to Karpowership.
The Organisation for Undoing Tax Abuse (Outa) hailed the decision as a public-interest victory. 'The Karpowership deals are now absolutely dead. It will never be loaded onto your electricity bill,' said Outa's executive director, advocate Stefanie Fick.
The murky water of the proposed deal combined with its cost is illustrative of the potential risk of emergency procurement and the importance of the ITP keeping within the lines of a transparent, programmatic approach.
What this means for you
If executed on time, the ITP could help end load shedding, unlock private capital and boost local manufacturing of towers, cables and transformers.
Challenges remain with the possibility of landowner disputes, union resistance, regulatory delays and equipment lead times. Any slip risks leaving renewable energy stranded. The ITP's success will depend on whether a credible procurement process can translate into steel towers, substations and new lines fast enough to avoid a relapse into blackouts.
If this gamble pays off, it could see South Africa taking a major step forward to closing the load shedding chapter. DM
