Eskom, City of Johannesburg sign power MOU

Eskom and the City of Johannesburg (CoJ) have entered into a memorandum of understanding which is expected to facilitate the transfer or sale of electricity distribution in certain parts of the city from Eskom to municipality’s power utility, City Power.

The development comes a week after the CoJ signed a power purchase agreement with private electricity supplier Kelvin Power Station to add 100MW of electricity supply sent to the city.

Eskom emphasised, however, that the transaction itself has not yet been concluded with affected stakeholders also expected to participate in the decision making process.

“Should an agreement be reached on the discussions, the parties will seek the requisite regulatory approvals and give the affected customers an opportunity to contribute to a settlement in a public participation process.

“Among the regulators from whom approvals are required are the National Energy Regulator of South Africa (Nersa), National Treasury, and the Department of Mineral Resources and Energy,” the power utility said.

According to Eskom, the areas which are expected to be affected by the transfer or sale include parts of Soweto, Sandton, Orange Farm, Ivory Park and Diepsloot.

Eskom explained that in terms of the memorandum of understanding, City Power will undertake a due diligence study of the power utility’s existing assets and infrastructure in those areas.

“The due diligence study will consider, among others, the state and value of the infrastructure that would eventually be sold to City Power, the outstanding debt owed by customers to Eskom, and other corporate information that will be material to an eventual agreement”.

City of Johannesburg Mayor Mpho Moerane said the MOU signals the beginning of the city’s plan to find a “long term solution to power supply challenges in the city”.

“What remains now is for City Power and Eskom to explore, in detail, how the takeover from the national utility by our municipal entity can be best executed. Once these plans are finalised and agreed upon by all parties, we will update Johannesburg residents on progress and timelines,” Moerane said.