By Lehlohonolo Lehana.
The South African Local Government Association (Salga) has submitted an application to the Pretoria High Court for a declaratory order that would give municipalities exclusive rights to administer, distribute and sell electricity.
Eskom has had transmission and distribution licences from the National Energy Regulator of South Africa (Nersa) ever since the regulator’s inception. Eskom supplies electricity directly to about 6.9 million customers in South Africa. These include about 6.7 million residential customers, 53,000 commercial customers, 3,560 mining and industrial customers, 78,500 agricultural customers and 470 rail customers across the country.
Other organisations also hold distribution licences from Nersa, and are named as respondents, alongside Eskom, in the Salga application to the Pretoria High Court. These include Sasol, AECI, South African National Parks, Mpumalanga Economic Growth Agency, West Rand Power Distributors, Vleesbaai Dienste, Damplaas Kragbron and Ithala SOC.
The ministers of Mineral Resources and Energy, Public Enterprises and Cooperative Governance and Traditional Affairs, and the regulator, Nersa, are also named as respondents in the Salga application.
The order sought by SALGA is meant to end a dual system in areas where some users get their power directly from Eskom and some from the municipality. SALGA claims that in such instances, Eskom gets to use the municipal infrastructure to distribute electricity for free. It further states that there is a “fundamental problem” with the current system.
A notice by SALGA Chief Executive, Xolile George, pointed out that self-generated revenue, which includes, rates, water, and electricity among other services, were the biggest source of income for municipalities.
“The revenue generated from electricity is used to cross-subsidise other municipal services. The distribution of electricity by Eskom with municipal jurisdictions leads to a loss of revenue or an opportunity to generate revenue from the distribution of electricity for municipalities.”
SALGA claims that in 2019 alone, the total revenue that municipalities lost due to the system amounted to R162 billion.
However Salga’s court application seems to ignore the fact that many municipalities across South Africa are in fact failing in their service delivery obligations.
At grass-roots level, there is deep dissatisfaction by residents with service levels and quality of supply in these municipal areas, as evidenced by widespread and ongoing protests and civil unrest.
Many municipalities are in a state of dire financial distress, with associated failures in municipal administration, billing, revenue collection and asset protection.
Domestic and business customers receiving power from municipal electricity distributors complain of exorbitant mark-ups on electricity procured from Eskom, and extensive and ongoing power supply outages as a result of old and poorly maintained municipal electricity distribution infrastructure.