The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
Pipeline Company’). Natural gas imports from Mozambique via this pipeline provide the
total 4 per cent natural gas contribution to South Africa’s primary energy resource base.
The government of South Africa and Sasol are parties to a regulatory agreement in
respect of the transmission pipeline, dated 26 September 2001, which is grandfathered
by the Gas Act (‘the Regulatory Agreement’). Pursuant to the Gas Act, the Regulatory
Agreement is binding on NERSA in its capacity as the Gas Regulator, for a period of
up to 10 years from the date on which the natural gas is commercially supplied into
South Africa from Mozambique (‘the Sasol Special Dispensation Period’). 35 The Pipeline
Company holds the transmission licence for this gas transmission pipeline, and has
appointed Sasol to operate and maintain this transmission pipeline.
Prior to 2004, the bulk of South Africa’s modest gas transmission and distribution
network, mostly under Sasol ownership, was used for the supply of gas produced from
coal at Sasol’s facilities in Secunda and Sasolburg. Under the Regulatory Agreement,
Sasol obtained a concession from the government of South Africa guaranteeing that
Sasol’s existing gas networks and its envisaged future network build-outs scheduled
for the first five years after the start of the Sasol Special Dispensation Period would be
licensed by the Gas Regulator.
ii Transmission/transportation and distribution access
Electricity
Under the ERA a licensee in respect of any transmission or distribution facilities must
provide non-discriminatory access to its facilities to all third parties and may not discriminate
between customers or classes of customers regarding access, tariffs and conditions of
service except for objectively justifiable differences approved by NERSA. The provision
of transmission access and services is regulated by the Grid Code, 36 and the provision of
distribution access and services is regulated by the Grid Code and the Distribution Code. 37
These codes set out, inter alia, the minimum technical requirements for connecting
customers (whether generators or load customers) to the grid, the minimum technical
requirements to be met by network owners, and the rights and obligations of the system
operator in respect of maintaining the short-term reliability of the transmission network.
On the face of the ERA (and ignoring the impact of the ERA Amendment Bill),
open-access rules including rules regarding wheeling services should have been developed
by NERSA by now. But since South Africa’s nascent rollout of IPP generation is not being
managed on a first-come first-served basis, but rather staggered through centrally controlled
procurement programmes (on a ‘by invitation only’ basis), and given the apparent policy
natural gas and condensate in Mozambique, production of oil in Gabon and production of
shale gas in Canada.
35 It appears that this period will end in or about 2014.
36 South African Grid Code published by NERSA in July 2010, as updated from time to time,
currently comprising the Preamble, Governance Code, Network Code, System Operation
Code, Metering Code, Transmission Tariff Code and Information Exchange Code.
37 South African Distribution Code published by NERSA in September 2007, as updated from
time to time.
247