Local industries will not be sidelined in the rollout of South Africa’s Independent Transmission Projects (ITP) programme. This was the assurance from Electricity and Energy Minister Kgosientsho Ramokgopa during last week’s industry engagement session on localisation and industrialisation of the Transmission Development Plan (TDP) and ITP.
His remarks followed a letter, dated September 23, to the Independent Power Producer (IPP) Office, co-signed by Sagren Moodley, Chairperson of the Powerline and Substation Association, as well as Lucio Trentini, CEO of the Steel and Engineering Industries Federation of Southern Africa, and Philippa Rodseth, Executive Director of the Manufacturing Circle.
The three industry leaders raised concerns that the ITP’s request for qualification (RFQ) may exclude local industry participation due to its “extremely onerous” pre-qualification criteria. They argue that the technical and financial requirements are so demanding that only a limited number of international firms will qualify and no South African company is likely to meet the threshold.
The RFQ requires bidders to demonstrate relevant experience by submitting organograms illustrating contracting structures for three previous transmission line projects and three substation projects undertaken within the past 15 years.
“No South African company can meet this requirement and there is no obligation on qualifying international participants to identify local contracting or manufacturing partners,” they said.
In its response, the IPP Office said the criteria are designed to ensure technical competence, financial credibility and programme success.
“The first phase of the ITP programme seeks to leverage the experience of developers who have financed, designed, constructed and operated transmission infrastructure projects under long-term concessions within ITP frameworks. The technical pre-qualification requirements are not exclusionary but intended to mitigate any operational risks to the national transmission network and ensure the success of the ITP programme,” the IPP Office said.
Lenders, the IPP Office noted, are also unlikely to finance projects where project sponsors lack a proven track record.
Industry representatives further argued that the 49% minimum equity share requirement for South African-owned entities does not explicitly include the construction and manufacturing sectors.
“This allows international participants to partner solely with local financiers or ‘tenderpreneurs’, limiting collaboration with construction and manufacturing firms that drive employment, sustain local capabilities and support long-term industry growth,” they said.
The IPP Office countered that local companies are not excluded, and encouraged international and local firms to form partnerships from the outset, as envisaged in the RFQ.
New opportunities for local EPC players
During his address, Ramokgopa reaffirmed government’s commitment to localisation and industrial growth.
“The ITP has been designed to advance South Africa’s broader industrialisation strategy. We are prepared to pay the price and premium for growing the South African economy, and we intend to do so through the ITP programme. I know our industry is ready,” he said.
The ITP will create new opportunities for local EPC players, which will be detailed in the upcoming RFP, added Ramokgopa.
“What we can’t remedy in the RFP, we’ll address in subsequent rounds,” he said, emphasising that local participation will be progressively increased as the programme evolves.
The IPP Office noted that the R440 billion (US$25 billion) investment required to modernise and expand South Africa’s transmission grid over the next decade presents a major industrialisation opportunity.
“Through the ITP procurement programme, government aims to channel this investment into local manufacturing, skills development and job creation across the transmission value chain for sustained industrial growth,” the IPP Office said.
Moodley, Trentini and Rodseth urged the inclusion of a local-content clause specifying the minimum percentage of products and services to be sourced locally.
“For example, 100% of steelwork and hardware should be procured from local manufacturers who already have the capability to produce these items. Providing such certainty of demand will encourage investment in additional local manufacturing capacity where required,” they said.
The ITP and TDP offer a once-in-a-generation opportunity to revitalise South Africa’s industrial base, they added.
“By deliberately directing investment towards local industries and embedding a well-structured industrialisation strategy, the programmes can generate significant employment growth. A well-defined localisation plan will ensure that commitments to local procurement and industrialisation are not merely aspirational but deliver tangible outcomes,” the letter stated.
