Most South African energy deals start with urgency and alignment. Then somewhere between month four and month six, the same disputes surface: “That wasn’t our understanding of how curtailment would be treated.” “Your invoice doesn’t reconcile to our metering data.” “We didn’t agree that network losses would be allocated this way.” “We thought approvals were your workstream.”
None of these are technically complex problems. They are documentation failures – situations where the commercial understanding existed between the parties but was never reduced to a shared, unambiguous record that Finance and Operations on both sides could work from independently.
The intervention that prevents this is not a longer contract. It is one document, produced before heads of terms are finalised, that forces the parties to agree on the operational reality of the deal before lawyers begin translating it into drafting language.
What the Truth Sheet resolves – and why it matters in the SA context
South African energy transactions carry specific commercial complexity that generic drafting doesn’t resolve. Municipal and Eskom network layers create tariff structures where the energy charge, the network access charge, and the loss factor treatment are all calculated differently and sourced from different data points. Wheeling arrangements add a third-party dimension where the billing chain involves a generator, a licensed distributor, and an end user – each with different metering obligations and different exposure to network constraint events. Time-of-use pricing means that the shape of delivery – not just the volume – determines revenue, and the interaction between actual generation profiles and buyer consumption patterns needs to be explicitly agreed before it becomes a monthly billing dispute.
The Truth Sheet addresses this by requiring agreement, in plain terms, on five things before drafting begins.
The first is the parties and their operational roles – not just the legal entities, but who manages the relationship day-to-day, who is responsible for metering data, and who has authority to raise and resolve billing disputes. Named contacts, not job titles.
The second is the monthly cashflow structure set out like a bank statement rather than a legal schedule: the energy charge calculation, the network and wheeling charge allocation, the loss factor treatment and how it is measured, VAT treatment, and payment timing. If two financial teams cannot independently reconstruct the same invoice from this page, the billing mechanism is not agreed – it is deferred.
The third is the data source for each value in the billing calculation. Meter point identification, network operator statements, agreed calculation methodology for losses, and the process for reconciling discrepancies. Every value that appears on an invoice needs a defined source. In a market where Eskom network statements and municipal billing systems operate on different cycles and different data formats, this is not a trivial requirement.
The fourth is the treatment of the four events that actually occur in SA energy projects: grid curtailment, planned maintenance, unplanned outages, and late payment. For each: what happens to the delivery obligation, what happens to the payment obligation, and who carries the cashflow impact. The deemed energy mechanism – how the project recovers revenue for generation that was available but curtailed by the network – needs to be explicit here, because it is the provision that drives the most post-signing disputes in constrained grid environments.
The fifth is the approvals register: every required approval, the party responsible for obtaining it, and the target date. One approval with no named owner is frequently the reason an entire project timeline slips.
Why the Truth Sheet changes the drafting process
The standard approach – negotiate heads of terms, instruct lawyers, allow the commercial reality to be discovered during drafting – is the most expensive version of deal structuring. It is expensive because drafting pauses when commercial gaps are discovered, because the cost of resolving gaps increases as both parties become anchored to positions, and because the long-form agreement that results often pushes the operational understanding into annexures that neither Finance nor Operations will consult after signing.
The Truth Sheet is shared with Finance and Operations on both sides before drafting begins. Once both sides have signed off on it, the long-form PPA is drafted to reflect it – not to discover the commercial reality for the first time. When a dispute arises later, the Truth Sheet is the shared baseline that both sides agreed to before the relationship became political.
In a market where tariff structures, network constraints, and regulatory timelines are genuinely dynamic, the document that keeps the deal operational is not the one with the most clauses. It is the one that both Finance teams can use on the first of every month without calling a lawyer.
Caveat Legal works with energy developers, IPPs, municipalities, and off-takers on SA energy transactions from early-stage structuring through to financial close. If you are building a commercial framework for an energy deal and want to pressure-test it before drafting begins, get in touch.
