Government advised to restructure NamPower
Split to spur energy sector growth
Government has received a suggestion to divide NamPower into multiple business units to encourage more market entrants.
A proposal has been made to government to split bulk electricity supplier NamPower into three different business units to allow more players into the electricity generation space and to promote new energy projects.Systematic, a consulting firm, made the recommendation during a recently concluded green hydrogen workshop.
Systematic suggested NamPower be split into three business units, namely transmission, generation and distribution, to create better synergies within the electricity generation and distribution industry.
“The objective here is to create a transparent market for independent power producers (IPPs) willing to enter the market. The idea is that it will create better partnerships and, obviously to provide interest by having more than one player do both the generation and transmission,” Systematic said during a presentation at the workshop.
The move, if implemented, will see the adoption of a similar model being mooted for South African bulk energy provider Eskom, which is being divided into different business units.
“South Africa is moving forward with this topic, and they have made some progress with transmission moving one step further to be separated into one new entity,” Systematic said.
SA’s path
The National Energy Regulator of South Africa (Nersa) last week consented to the transfer of Eskom’s powers and duties related to Section 34 of the power purchase agreements with IPPs to the National Transmission Company South Africa (NTCSA).
It also sanctioned issuing a cost recovery letter to the NTSCA for section 34 IPP projects to designate the NTSCA as the buyer in terms of the Energy Regulation Act.
The regulator said Eskom’s application for consent to transfer its power and duties – submitted in December 2023 – marked a pivotal step of the power utility’s unbundling process.
The project aims to make Eskom more manageable and encourage more private sector participation in electricity production. It could also allow IPPs to compete directly with Eskom’s generation division.
In December 2021, Eskom transferred its transmission to its wholly-owned subsidiary, the NTCSA.
Under the plan, its generation and transmission units had to be separated by the end of December 2021 and the distribution division by December 2022.
Eskom said in a statement to debt investors that it had now executed an order to transfer the transmission division.