Sakeliga announces intervention plan to restore electricity supply to businesses

This includes interdicting Eskom from cutting power to paying users in delinquent municipalities

Sakeliga announces intervention plan to restore electricity supply to businesses

13 December 2019

The business organisation Sakeliga today announced an intervention plan to restore electricity supply for business communities across South Africa. This includes 1) interdicting Eskom from cutting power to paying end-users in delinquent municipalities; 2) bypassing municipalities in local electricity distribution; and 3) presenting government with simple, ready-to-implement regulatory changes.

Sakeliga’s latest interventions follow Eskom’s announcements that it will be cutting power supply to end-users in several local municipalities countrywide owing to municipal non-payment, as well as the unprecedented countrywide rolling blackouts experienced last week.

Piet le Roux, CEO of Sakeliga, says: “In 2019 we prevented or assisted in preventing electricity supply being cut to paying customers in Musina, Witbank, Koster, Swartruggens and several other towns. We will now extend our efforts to other municipalities. We will also prevent municipalities from getting hold of and misappropriating electricity fees in the first place. And we will present government with easily implementable regulatory changes to allow private sector electricity generation.”

Le Roux says Sakeliga will be approaching Eskom with a view to cooperation: “We will be extending an invitation to Eskom to discuss our planned interventions and possibly coordinate our efforts. It is in our mutual and the public interest to prevent these collapsing municipalities from further misappropriating electricity payments meant for Eskom,” said Le Roux.

At the heart of the matter, says Le Roux, lies the need to shield the economy from failing organs of state: “The economy is too important to leave to politicians. The more state-proof each local economy and the economy as a whole are, the better for everyone. While businesses should always remain open to partnering with authorities in the public interest, it is now in the public interest to not wait any longer for state reform. Rather, it is incumbent on businesses to take the lead in economic reform themselves.”

Sakeliga’s intervention plan to restore electricity supply

1. Litigate to prevent Eskom from cutting power supply to paying customers

a. Initiate further litigation to assist Sakeliga’s members and affiliated chambers in municipalities to prevent Eskom from cutting power supply to paying end-users.

b. Continue our litigation to act as amicus curiae in the case between Resilient Properties and others vs Eskom and others. Sakeliga will argue inter alia that Eskom and municipalities as organs of state are related parties and that their internal disputes cannot be used as an excuse to cut power supply to paying end-users.

c. Continue our litigations in the case between Sakeliga and others v. Eskom and others that Eskom may not cut power supply to end-users in municipalities because of municipal non-payment. Sakeliga will argue that Eskom is obliged under law to follow various internal dispute resolution mechanisms involving inter alia National Treasury.

2. Bypass municipalities as fee-collecting middlemen

a. Protect electricity fees collected from municipal users by forcing municipalities to ringfence this money for payment to Eskom.

b. Have the distribution licences of delinquent municipalities revoked and transferred to Eskom or alternative distributors, so that end-users may buy directly from Eskom or alternative providers.

c. Identify and implement a suitable test case for setting up alternative distribution entities from businesses and/or community groups in a local municipal area.

3. Present the Minister with ready-to-implement regulatory changes

a. Propose that the Minister of Mineral Resources and Energy, Gwede Mantashe, exercise his prerogative in terms of section 34 of the Electricity Regulation Act (ERA), to make determinations that would allow for immediate approval of private electricity generation projects. This would let private electricity generators supply electricity to municipalities and large commercial users.

b. Propose the Minister urgently change schedule 2 of the ERA to greatly extend licensing exemptions for private generation. Specifically, we will request the Minister to use his discretion to raise the exemption limit for private generation from 1MW to 30MW, as is within his power in terms of section 8(1) of the Act.

c. Propose an exemption of private electricity generation projects from the limits imposed by the Integrated Resource Plan (2019) (IRP) until such time as the IRP may be amended to reflect the greater need for power decentralisation.

d. A separate media release, explaining and detailing the proposed changes, will follow after submission of the proposals to the Minister.

Invitation to affected business communities

Sakeliga’s legal team is currently identifying suitable municipalities to implement its proposed interventions.

Says Le Roux: “We invite business representatives from municipalities in danger of having their electricity supply being cut because of municipal non-payment to approach Sakeliga for assistance. Based on the advice of our legal team we will then evaluate each case and assist or advise these business communities accordingly. Priority will be given to areas with Sakeliga-affiliated chambers of commerce.”

Business representatives and communities who would like to be involved can join the cause here.

Statement issued by Piet le Roux, CEO: Sakeliga, 13 December 2019