The Midvaal Municipality in Gauteng plans to say goodbye to Eskom and outsource its electricity supply to a private company to improve revenue and infrastructure efficiency. The partnership aims to address maintenance backlogs and secure long-term financing. The private partner will manage the network, employing municipal staff for at least three years. Interested companies from America and China are bidding. The South African Independent Power Producers Association supports this model as a solution to the municipal power crisis.
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The Midvaal Municipality in Gauteng is getting ready to outsource its electricity supply to a private company as it moves to improve revenue from electricity sales and the efficiency of managing power in the network.
Speaking to Rapport, Midvaal MMC for engineering services Reginald Hubbard said the municipality’s outdated electricity infrastructure was another factor considered when deciding to involve a private company.
He said the long-term contract and revenue stream will enable the private partner to secure financing to tackle the maintenance backlog while managing and maintaining the network for the rest of the term.
Hubbard added that Midvaal Municipality will support the successful bidder with grants it receives from the government. The municipality will continue to hold the distribution licence with the private partner acting as its agent.
The partnership will also see the private company take over all Midvaal Municipality electricity department staff and keep them employed for at least three years.
Hubbard says the contract’s terms are yet to be finalised, but the municipality will likely get a percentage of electricity revenue.
He added that interested parties include companies from America and China.
The South African Independent Power Producers Association (SAIPPA) said Midvaal’s approach is the only way to solve the power crisis at the municipal level.
Another municipality in the Free State, Mafube Municipality, has used private solar power to reduce load-shedding for many years. However, in April 2023, it was blocked from doing so.
The municipality, home to Frankfort, had a 25-year contract with Rural Maintenance, which purchased electricity from four solar farms in the area, producing up to 3.7MW of generating capacity.
This allowed residents to benefit from cheaper rates than Eskom and Rural Maintenance to avoid implementing load-shedding on certain days, provided there was enough sunshine.
It developed its own system for calculating how it could avoid load-shedding by compensating for Eskom’s shortfall with its own generating capacity, which it called “voiding.”
Rural Maintenance’s legal representation from Shepstone & Wylie alleged that Eskom initially granted the company’s request for self-managed load-shedding on a pilot basis in January 2023.
Despite the trial returning positive data, Eskom lodged a dispute over Rural Maintenance’s “voiding” practices with the National Energy Regulator of South Africa.
It stated that voiding undermined load-shedding’s purpose and that Rural Maintenance had not properly consulted Eskom before implementing the system.
It demanded that the electricity distributor implement load-shedding per the published schedule.
Eskom explained that Frankfort’s solar power stations were already included in the municipality’s load profile and could not be considered extra capacity for the purposes of calculating load-shedding.
The state-owned power utility argued that if other parts of the country adopted a similar approach to Frankfort, it would prevent Eskom from maintaining the grid and could lead to a national blackout.
Rural Maintenance applied to the Johannesburg High Court to get an interdict against Eskom.
However, Johannesburg High Court Judge Molahleni dismissed the urgent application.
Rural Maintenance then scored a win in May 2024. It told MyBroadband that it had constructive discussions with Eskom following the High Court order preventing it from implementing voiding in Frankfort.
It said Eskom accepted that load-shedding wasn’t required in Frankfort when it was not receiving power from the power utility at the time.
“The System Operator feels this is a mechanism that does not negatively impact the national grid,” it said.
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This article was first published by MyBroadband and is republished with permission
