President Ramaphosa endorses Phase I report on the establishment of an independent Transmission System Operator

President Ramaphosa has endorsed the Phase I report of the Eskom Restructuring Task Team (ERTT), setting the stage to restructure South Africa's electricity sector to create competition, unlock investment, reduce electricity prices and ensure energy security for sustained economic growth and job creation. The report sets out recommendations for establishing an independent Transmission System Operator separate from Eskom.

"This report shows how government can ensure that the architecture of the electricity sector can change as the sector continues to evolve, creating the foundation for South Africa's growth. It is welcomed that all the key stakeholders are aligned on this objective", said President Ramaphosa

The report reflects a clear and unified vision across government to establish an independent Transmission System Operator SOC Ltd (TSO) which will be separated from Eskom.

The TSO is a key enabler of a successful competitive wholesale electricity market that is expected to deliver reliable and cost-effective electricity. This reform will support higher rates of economic growth, investment and job creation.

The analysis in ERTT's Phase I report, which was presented to the President by the ERTT on 30 July 2026, included the following:

• An analysis showing that the restructuring is feasible, in line with international best practice and can be done in a manner that does not compromise Eskom's financial sustainability.
• ⁠Highlighted that the growth in municipal arrear debt to Eskom would need to be addressed because of the threat to Eskom and the broader electricity sector.
• ⁠Identified several actions that can be taken immediately to enable the restructuring.

In Phase II, which starts immediately, the detailed transaction structure and implementation plan will be developed. Phase II will proceed over the next three months.

The ERTT has proposed that a working group develop a consolidated action plan, encompassing all initiatives aimed at arresting the growth in municipal arrears and identifying those to be scaled up and accelerated. Such initiatives include stronger enforcement of credit controls, rolling out smart meters and Distribution Agency Agreements (DAAs), and stricter license enforcement, as well as the continued implementation of the Municipal Debt Relief Programme, Metro Trading Services Reform and the Electricity Distribution Industry (EDI) Reform Roadmap.

The actions that the ERTT identified that could be implemented immediately include interim measures to strengthen the existing National Transmission Company of South Africa's (NTCSA's) independence as well as the internal ring-fencing of the NTCSA's different licensed activities.

In addition, first steps will be taken toward unbundling tariffs, clarifying the payment waterfall within the restructured market environment, and developing mechanisms to insulate market participants from non-payment.

The proposals to strengthen NTCSA's independence during the interim period until the TSO is established include various requirements to ensure good governance and strengthened regulatory oversight. Directors serving on the Eskom board will not be appointed to the board of the NTCSA, or serve on the boards of both the NTCSA and Eskom. The appointment of the Chief Executive Officer (CEO) and senior management of NTCSA will be the sole responsibility of the NTCSA Board.

There will be clear delegation of authority from Eskom to the NTCSA of all decision-making related to the market, financial and operational ring-fencing of NTCSA from Eskom.

Decisions on access to the transmission network are to be relocated to the NTCSA and eventually to the TSO. This includes cases in which connections are at the distribution level but have implications for the market or transmission network. Eskom Distribution will retain a Grid Access Unit to manage connections to its distribution network where projects connect at this level.

NOTES TO EDITORS

South Africa has embarked on a process of fundamental reform of the electricity sector to achieve a reliable, affordable, and sustainable supply of electricity for all South Africans. At the heart of the reform is the establishment of a competitive electricity market in which multiple generators, public and private, will compete to provide electricity most efficiently and at the lowest cost. This will ultimately ensure that electricity is delivered at affordable prices to power growth, create jobs, and enable access for all households. South Africa follows a growing list of countries which have implemented similar reforms.

The restructuring of Eskom to establish an independent transmission and system and market operator is a key enabler of the electricity reform agenda because it removes the inherent conflict of interest found in vertically integrated utilities.

Establishing a fully independent TSO is a key policy objective, enshrined in the Electricity Regulation Act (ERA) in 2024. It builds on the progress already made through the establishment of the NTCSA in July 2024 as a subsidiary of Eskom.

In the 2026 State of the Nation Address (SONA), President Ramaphosa underlined Government's commitment to this policy objective, stating that: "We are restructuring Eskom and establishing a fully independent state-owned transmission entity. This entity will have ownership and control of transmission assets and be responsible for operating the electricity market."

In line with the commitment made by the President, the ERTT was established at the beginning of March 2026. It is led by the directors general in the Presidency and National Treasury and comprises senior representatives from the Presidency, National Treasury, Department of Energy and Electricity, Eskom and the National Transmission Company South Africa (NTCSA). It is tasked with:

• Developing a detailed proposal and implementation plan for establishing an independent, state-owned TSO separate from Eskom that will assume ownership and control of transmission assets, operate the electricity market, enable transmission investment at scale, and provide non-discriminatory access to the grid.
• Giving consideration to the optimal institutional model for the TSO, drawing on international best practice and ensuring full alignment with the ERA.
• Addressing the measures required to ensure adequate independence of the NTCSA during the period before the TSO is established, and considering the appropriate location of responsibility for the allocation of grid capacity to ensure independent and non-discriminatory treatment of grid users, both during the transitional period and once the TSO is established.

The ERTT is tasked with overseeing the restructuring of Eskom to fulfil the following core principles set out in its Terms of Reference:

• Maintain energy security;
• Ensure full independence of the TSO from all market participants;
• Ensure that ownership of the transmission network and any other assets associated with the statutory functions assigned to the TSO in terms of the ERA is separated from Eskom;
• Ensure that Eskom is not worse off than its current financial position following the restructuring, and that the TSO is financially sustainable;
• Ensure that the TSO is able to raise the funding required for investment in infrastructure in line with the Transmission Development Plan;
• Avoid any qualified audit opinion for Eskom, the NTCSA or the TSO and ensure that that lender requirements are addressed to avoid any default;
• Minimise any adverse impact on South Africa's fiscal position;
• Prevent any undue financial burden on electricity users; and
• Promote the objectives of electricity market reform, including the successful introduction of independent transmission projects (ITPs).

The work of the ERTT is being undertaken in two phases. The Phase I, which was completed at the end of June, focused on developing a high-level proposal to establish the TSO. Phase II, which will be completed within a further three months, includes developing a detailed implementation plan with timeframes for completing the restructuring in the manner proposed.

Media enquiries: Vincent Magwenya, Spokesperson to the President - [email protected]

Issued by: The Presidency
Pretoria