The presidency said it plans to set up a body to oversee raising R319-billion that it estimates it needs to repair and upgrade the country’s municipal power grids.
The Just Energy Transition Municipal Forum and its secretariat will also train municipality staff and ensure the poor get access to a free electricity via a government grant, officials at a conference near Johannesburg said on Monday.
The forum is an attempt by the presidency to improve services in the country’s municipalities, many of which are dysfunctional, and to prepare them for the introduction of more renewable energy in coming years.
“The municipal grid system needs to be upgraded, modernised and extended,” President Cyril Ramaphosa said at the conference. “The energy generation of the future requires systems that are fundamentally different in terms of design, capability and operation.”
Currently, about 80% of South Africa’s electricity comes from coal-fired power plants run by Eskom.
Already, major municipalities such as Johannesburg — the country’s biggest — subject residents to frequent outages due to equipment breakdowns. In poorer areas, where grids are overloaded, power is regularly shut off for hours in a programme known as load reduction.
“There are hours in the day when multitudes of our people don’t have access to power,” electricity minister Kgosientsho Ramokgopa said at the conference. Nevertheless, power prices have risen 600% since 2006, he said. “The exponential increases in the tariffs is untenable, it can’t be sustained.”
R82-billion in debt
The country’s municipalities need R200-billion to catch up with maintenance, a further R45-billion to connect more people to electricity and R73-billion to modernise urban grids including the rolling out of charging stations for electric vehicles, a presidency presentation showed.
South African municipalities are already R82-billion in debt to Eskom and are struggling to meet the costs of providing reliable water and power services amid a litany of allegations concerning corruption and incompetence.
Read: Little or no load shedding expected this summer
The forum within the presidency will seek to help municipalities raise the money from sources including boosting private participation in the provision of power. It didn’t provide further details on how it will raise the money.
Those financial constraints are also playing a role in limiting the access of poor South Africans to a grant provided by the national treasury through municipalities to finance the provision of free electricity for the indigent.
National treasury gave Johannesburg, a city of about five million people, R7.6-billion this financial year to provide free services to an estimated 1.1 million indigent households, including R1.8-billion for electricity. That doesn’t match the amount of free power the municipality is providing.
City Power, the municipality’s distribution company, said it provides some free electricity for just under 11 000 households and Eskom gives free electricity to a further 6 400 on behalf of the city. The Johannesburg metropolitan area has about 1.8 million households.
“The free basic electricity subsidy for indigent households is one of the most important policies we have implemented to tackle poverty since the advent of democracy,” Ramaphosa said. “In a number of municipalities, it is not being used to good effect.” — (c) 2024 Bloomberg LP