South Africa’s presidency has unveiled a plan to raise 319 billion rand, equivalent to about $18 billion, to repair and upgrade the nation’s municipal power grids. The goal is to modernize the aging infrastructure, ensure reliable electricity for all citizens, and prepare the grid for a future that relies more on renewable energy. The announcement was made at a recent conference near Johannesburg, where officials detailed the steps needed to address the country’s power supply issues.
The Just Energy Transition Municipal Forum, along with its secretariat, will oversee this financial endeavor. This new body will focus on securing funds and training municipal staff to manage and maintain upgraded power systems. Part of the plan also includes ensuring that low-income households receive free electricity through a government grant. This initiative is seen as a critical step in improving the reliability and efficiency of power delivery across South Africa’s municipalities, many of which have struggled with dysfunctional and outdated infrastructure.
President Cyril Ramaphosa emphasized the urgency of modernizing the municipal grid system during his address at the conference. He stated that the future of energy generation will require fundamentally different systems in terms of design, capability, and operation. Currently, about 80% of South Africa’s electricity is generated from coal-fired power plants operated by the state utility, Eskom Holdings SOC Ltd. This heavy reliance on coal not only raises environmental concerns but also limits the flexibility and resilience of the power grid.
Major municipalities, such as Johannesburg, have been experiencing frequent power outages due to equipment failures. In poorer communities, overloaded grids often lead to planned shutdowns, known as load reduction, where power is cut off for hours to prevent total system failures. Electricity Minister Kgosientsho Ramokgopa highlighted this issue, noting that many people do not have access to power for hours and the cost of electricity has skyrocketed by 600% since 2006.
The plan to overhaul the municipal power grids comes with a hefty price tag. The presidency’s presentation at the conference outlined several key areas of investment: 200 billion rand to catch up on maintenance, 45 billion rand to connect more people to the electricity grid, and 73 billion rand to modernize urban grids, including the installation of charging stations for electric vehicles. These upgrades are seen as essential for ensuring that South Africa’s power infrastructure can meet the demands of a modern economy and a growing population.
However, the financial situation for South African municipalities is already dire. Many municipalities are heavily indebted to Eskom, owing a total of 82 billion rand. Additionally, customers, including both residents and businesses, owe municipalities 345 billion rand. This debt burden has made it increasingly difficult for local governments to maintain reliable water and power services.
The recently signed Electricity Regulation Amendment Act has added another layer of complexity to the situation. This new law removes some of the rights previously held by municipalities to distribute electricity, which could potentially reduce their income. Xola Pakati, deputy president of the South African Local Government Association, expressed concern over this development, saying it “raises an existential crisis for municipalities” since it takes away their income.
In response to these challenges, the Just Energy Transition Municipal Forum will work to find innovative ways to raise the necessary funds. One strategy being considered is increasing private sector participation in the provision of power. This could involve partnerships with private companies to build and maintain power infrastructure or allowing private entities to generate and sell electricity directly to consumers. However, details on how exactly the funds will be raised remain scarce, leaving many questions about the feasibility and effectiveness of the plan.
