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Tshwane plans to lease two power stations to IPPs

Move receives some scepticism

Noxolo Sibiya Journalist
The Pretoria West power station is one of two the City of Tshwane wants to lease to independent power producers to generate more electricity for the City.
The Pretoria West power station is one of two the City of Tshwane wants to lease to independent power producers to generate more electricity for the City.
Image: Thulani Mbele

The City of Tshwane’s master plan to lease two power stations and limit power outages has been welcomed, with some people wary over costs to consumers.  

The early reactions came on Monday after mayor Cilliers Brink announced that the city would lease out the ineffective Rooiwal and Pretoria West power stations to independent power producers for a period of 40 years.

This, he said, was to reduce the city’s dependence on Eskom with the aim of producing 1,000MW in the next three years. However, the city has not released details on how it would manage the pricing to its consumers should the deal pull through. 

The city is expected to initiate a public participation process where residents would be invited to give commentary on the lease before it is adopted by council. The speaker’s office is expected to announce dates and venues soon for public participation meetings.

The Rooiwal plant has been producing only 60MW while Pretoria West has been dormant over the years. 

Although welcomed by many, the move has also received some scepticism. 

President of the Mamelodi Concerned Residents Association, Oupa Mtsweni, said the organisation which helps residents address their billing issues with the municipality is worried that the hundreds of indigent households it represents may be disadvantaged. 

“People need to understand that the community of Mamelodi already cannot afford electricity. Residents are struggling to keep up with the cost of electricity. We need to be thoroughly taken through this energy plan and how it will benefit or inconvenience the poor. 

“We have a problem with illegal electricity connections and meter tampering, which affects the price of electricity. People end up paying for those who have connected illegally; the city has to explain to us how an IPP will mitigate this challenge,” he said.

Mtsweni was also concerned that the public participation meetings might be soiled by political differences in Tshwane.  

“Before coming to our halls and addressing communities, it would be better to sit down with different stakeholders and get a sense of each community's needs.”

Since coming into power in March this year, Brink has had to deal with some backlash and resistance which peaked during the Hammanskraal cholera outbreak in May with the community chasing him away. Currently, he is caught up in wage dispute by unionised council employees who he has accused of sabotaging services, infrastructure and of intimidation of non-striking employees. 

Hellen Kgobo, the founder of the Tshwane Service Delivery Association in Soshanguve, said she was not too excited about the power lease until she sees the fine print.  

“Until we know what we are signing up for, we should not get too excited. Of course, we would like reliable electricity but at what cost to the consumer? How much will we be paying and how will the agreement between the municipality and this power supplier impact us over the years? 

“In this community a lot of people are unemployed people, pensioners and child-headed homes. Before this [deal] goes ahead, the municipality would have to explain how the poor will be subsidised and then give that to us in writing,” said Kgobo.

Mike Burt of the Capital Park Residents and Ratepayers said the plan must be seen as a temporary solution to Eskom’s failure to supply electricity.  

“The city obviously cannot afford to generate electricity, Eskom is failing with constant power outages that affect the infrastructure and lead to prolonged outages, so any help to get businesses economies running smoothly again is welcome. But Tshwane must look into more sustainable and renewable forms of energy that can sustain us in the long run.

“Green energy is the future and looking into solar, wind and hydrogen would certainly be more sustainable. But the idea is good as a temporary solution.” 

Fanie du Plessis, CEO for the Capital City Business Chamber said this move by Tshwane would benefit businesses and save jobs. 

“The Capital city has about 40 manufacturing businesses such as your BMW, SAB, and Ford in Silverton. The retail industry is the second biggest and property. All of these industries rely heavily on electricity. 

“Companies have lost revenue to load-shedding either through alternative means of energy of overtime payments to workers for any shifts rearrangements done as a result of outages. There have been talks by companies of retrenchments because of the revenue losses, which could be avoided if the plan for private supply of electricity goes ahead. 

“This plan would improve the economy of the Capital City and make it an ideal place for investment.” 

However Brink has told SowetanLIVE that they have a list of non-negotiable which will include the following.

1. Lease offer at or above the proposed lease amount threshold, we will not accept anything less.

2. Competitive tarring pricing (Eskom bulk tariff will serve as a guideline but we will look at value for money i.e. guarantee of supply, capital investment made that has to then be recuperated through the price, time to market i.e. how soon can they generate power, job creation delivery, carbon emissions profile etc.)

3. Absorption of current staff compliment i.e. the successful bidder has to generate and operate WITH our employees and transfer skills and knowledge during period

4. Strength of balance sheet, as this project requires significant investment and operational capital every month.


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