In a joint statement on 1 October, the Department of Electricity and Energy and National Treasury moved the final request for proposals for South Africa’s first independent transmission projects from the third quarter of 2026 to the second quarter of 2027. Before then, the seven pre-qualified consortia will receive a second draft package and a “focused and time-bound” round of consultation on “any remaining material bankability issues”.

Phase I covers approximately 1,164 km of new 400 kV transmission lines, and the statement itself says that the pace of transmission expansion “will increasingly determine how quickly new generation investment can be connected to the grid”.

The final request for proposals is the document against which bidders submit binding, priced bids. If the package is incomplete when it is issued, bidders protect themselves with qualifications, and the time saved at the start is spent later on what the statement calls “extensive clarifications, conditional bids and protracted negotiations”.

Conditional bids are also hard to compare on price, because bidders qualify different risks. A second draft round moves that work forward, so that it is done on a single package that all seven bidders see.

Three layers that bidders price together

The package rests on three distinct layers, and they are easy to run together. The first is the contract. Under the Minister’s determination of 28 March 2025, the National Transmission Company South Africa (NTCSA) is the buyer, and the lines are procured from independent transmission providers under a transmission services agreement. Before NTCSA signs, regulation 9 of the Electricity Transmission Infrastructure Regulations, 2025 requires the procurer to ensure that the agreement represents value for money and transfers “appropriate technical, operational and financial risks” to the provider.

The second layer is how NTCSA recovers what it pays the provider. Regulation 10 requires the National Energy Regulator of South Africa (NERSA), when it sets or approves a transmitter’s tariffs, to ensure that the buyer can recover “at least the full amount” of listed costs. They include annuity payments under the agreement and the costs of terminating it. Before signing, the buyer may ask NERSA to confirm which categories of cost will be recoverable, and NERSA must respond within 30 days.

The third layer is credit enhancement, which is where the Credit Guarantee Vehicle (CGV) sits. It is distinct from tariff recovery and is being established as a private non-life insurer that is independent of government and regulated by the Prudential Authority.

The statement calls the vehicle “an important component of the credit enhancement architecture being developed for Phase I”, and says its draft non-binding term sheet will be aligned with the rest of the transaction, “including the regulatory cost recovery framework, risk allocation and ring-fencing arrangements”.

Bidders and their lenders price all three layers at once. Since the first round of bidder engagement, the department, National Treasury, the IPP Office, NTCSA, Eskom and NERSA have been working through “the remaining commercial, regulatory and financial matters”. The second draft will allow the CGV terms to be “considered alongside the wider transaction architecture” before binding bids are invited.

Why the first round carries more weight

Phase I is, in the statement’s words, “a pathfinding procurement”. Its architecture is intended to be the foundation for “a longer-term, programmatic pipeline of private investment in transmission”, and the government says the quality of that framework will have “implications well beyond the projects being procured in this first round”. A gap left in the Phase I documents would have to be closed again in each later round, or carried into it.

The supply chain has a stake in this. The statement links a sustained pipeline to localisation, through “greater visibility of future demand for equipment, construction capability, skills and services”, and to “a more predictable and repeatable framework for investors, lenders and the transmission supply chain”.

What happens between now and mid-2027

The statement sets out the sequence:

• Before the end of 2026, the second draft package goes to the seven consortia, expected to be accompanied by the draft non-binding CGV term sheet.
• Feedback from the consultation is assessed, and accepted changes are incorporated into the transaction documents.
• The package then goes through “the required governance and approval processes”.
• Once the CGV is operational, further due diligence follows in the first quarter of 2027, with a binding CGV term sheet targeted by the end of March. Its licence application is with the Prudential Authority.
• The final request for proposals is targeted for the second quarter of 2027.

Generators and large energy users planning around these lines should move any assumption of a 2026 tender to the second quarter of 2027. Equipment suppliers and contractors should read the final Phase I documents as the template for the rounds that follow, because that is what the government intends them to be.

This article is general information and is not legal advice.