Eskom and Tshwane clash over megacity power contract

Power utility Eskom and the City of Tshwane have locked horns over who gets to distribute power to the planned Mooikloof Mega City on the outskirts of Pretoria East.

Rapport reported that the R84-billion development’s electricity supply deal would generate an estimated R1.5 billion in revenue a year.

Initially announced in October 2020, the Mooikloof Mega City is a public/private collaboration between Tshwane and Balwin properties that will see thousands of new homes built around six kilometres to the east of Woodlands Mall.

It is envisioned to become the world’s largest sectional title development.

The megacity’s surrounds will include sought-after neighbourhoods such as Woodhill Golf Estate, Mooikloof Equestrian Estate, Mooikloof Heights, Mooikloof Ridge, The Hills Golf Estate, Grootfontein Country Estate, and Mooikloof Glen.

Balwin is initially building 16,000 apartments at a 2020 value of approximately R9.6 billion in phases.  It could expand to 50,000 apartments worth about R44 billion in 2020 value.

Land in the development area has also been earmarked for schools, shops and offices.

The homes and businesses are expected to consume copious amounts of electricity, which Eskom and Tshwane want the right to sell.

According to Rapport, Eskom recently approached energy regulator Nersa to apply for an amendment to the requirements of its distribution licence to include Mooikloof Mega City.

The utility pointed out that the City of Tshwane does not currently provide electricity to the area where Mooikloof Mega City is being built, while Eskom supplies power directly to more than 70 farmers in the region.

It claims the city does not have the technical ability to provide power and that allowing another network in addition to Eskom’s could create a dangerous situation.

The utility quoted Balwin on expanding its electricity distribution network in the area to accommodate the development in 2015.

Tshwane, meanwhile, acknowledged it only required bulk supply from Eskom in September 2020 and that it wanted to handle the distribution itself as it would be a significant revenue injection.

Key to the outcome of this feud is a court case brought by the South African Local Government Association (Salga). It seeks to give municipalities the sole right to sell electricity to customers within their governable areas.

Energy expert Chris Yelland has warned that Salga’s application seems to ignore the fact that many municipalities are failing in their service delivery responsibilities, which is why some residential areas and businesses are instead going directly to Eskom.

In addition, businesses often complain of excessive markups on tariffs charged by the municipalities, which use the revenue to fund other municipal activities.

Furthermore, many South African municipalities stand accused of misappropriating electricity sales revenue instead of paying Eskom, leading to billions in debt owed to the utility.

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