Municipal 2023/24 Energy Infrastructure plans: Cape Winelands District

Meeting report

Meeting report
Chairperson's opening remarks
The Chairperson started the meeting with a moment of quiet reflection. He welcomed the Committee, representatives from various municipalities, mayors, deputy mayors, municipal managers, officials and members of the public. The Committee would engage with the municipalities on the projected plans for the 2023/24 energy infrastructure allocation, including the emergency funding allocated to assist the municipalities.

Witzenberg Municipality presentation
Mr Cobus Kritzinger, Witzenberg municipality Chief Financial Officer (CFO), said the Witzenberg municipality received an EMLR grant of R450 000 for the supply and servicing of emergency backup generators. The municipality advertised the tender for appointing service providers to supply and service emergency backup generators from 19 April 2023 to 08 May 2023. Unfortunately, the municipality did not receive any bids from any service providers. With the approval of its municipal manager, the Witzenberg municipality set in motion a deviation process, which deviated from the normal tender process, and identified a service provider who would supply the required equipment. However, the identified service provider could not produce a tax clearance certificate and the Witzenberg municipality could not conduct business with the service provider because they were not tax compliant.

The Witzenberg municipality was currently busy with a Supply Chain Management (SCM) process to find a new service provider and has applied for its funds to be rolled over to the current financial year. The funds had already been included in the adjustment budget which the Council would approve by 25 August 2023. The municipality anticipated spending the funds by 31 October 2023 and it would add some of its funds to secure more generators. The main purpose for procuring additional generators was for the municipality to continue rendering critical services during load-shedding such as water and sewerage services to avoid sewage spillages (see document).

Discussion
Ms C Murray (DA) asked for the details of the tender advertisement process to determine why the Witzenberg municipality did not receive any bids. Did the municipality have an idea why the initial bid process was unsuccessful? Did the municipality target specific service providers? What did the legislation say about the deviation process taken by the municipality?

Mr P Marais (FF+) emphasised Ms Murray’s question and asked why the municipality did not receive any bid applications when there were a lot of job seekers and small businesses. What were the terms and conditions of the tender?

Ms N Nkondlo (ANC) asked what the basis of the deviation process was. Where did the identified service provider emerge from since the municipality did not receive any bids initially? With the municipality indicating that it would use some of its funds to secure more generators, how much money would the municipality self-finance to procure generators? Has the municipality’s budget been approved? How many generators would be secured with the additional budget?

Mr A van der Westhuizen (DA) asked for the locations in the Witzenberg municipality which required generators urgently. Since the pump stations and sewerage plants were energy intensive, would the generators be installed there and would they be permanently installed or would a mobile generator be transported to the challenged areas?

The Chairperson asked what the Witzenberg municipality was doing to mitigate the non-treatment of wastewater and sewage spillages since the initial bidding process was unsuccessful.

Witzenberg response
Mr Kritzinger said the Witzenberg municipality followed a normal supply chain process in the advertised tender. The municipality prepared a bid document which was advertised in newspapers to attract possible service providers. The municipality did not directly contact potential service providers. The appointment process was open and transparent and preferential treatment was not given to any service providers.

The representatives from the Witzenberg municipality experienced some technical difficulties, which prevented them from answering the outstanding questions.

Follow-up questions
The Chairperson said the Committee would submit its questions in writing to the Witzenberg municipality which should be answered within a reasonable time frame.

Mr Marais asked if the service providers were required to register with NERSA in terms of the Electricity Regulation Act 4 of 2006.

Ms Murray asked if there was any engagement or advertising done with international players within the industry. If not, why?

Mr D America (DA) asked on what media platform it advertised the tender. Was the tender only advertised in the Witzenberg local media or did it have a wider reach to potential players who could make bid proposals?

Witzenberg response
Mr Kritzinger apologised for the technical difficulties from their side. The municipality followed the normal process to advertise the tender. The tender was advertised in the provincial newspaper and on the municipal website. The municipality did not contact any specific potential service providers because it would have seemed as if the municipality was giving an unfair advantage to those service providers compared to other potential bidders. The municipality did not receive any bids, probably because the province had made funds available to various municipalities, which subsequently embarked on a tendering process for service providers to supply and service generators. Unfortunately, there was a limited number of generators available on the market and Witzenberg’s tender was smaller than other municipalities. Perhaps the potential service providers prioritised high-value tenders.

As per regulation 36 of the Supply Chain Regulations, a municipal manager could authorise a deviation from the normal tendering processes in certain instances which included an emergency. After initiating the normal tender process, the municipality decided to proceed with a deviation process as it was faster than the normal process because it did not require the municipality to advertise the tender for at least two weeks and up to a month. The municipality went through its database to identify service providers they believed would assist the municipality. While the identified service provider agreed to supply and service the municipality’s generators, the service provider was found to be tax non-compliant. Thus, the municipal manager could not approve the identified service provider because legal requirements required government service providers to be tax-compliant. For that reason, the service provider was not submitted for authorisation to the municipal manager. The municipality kept the strategic pumps running during load-shedding by transporting its mobile generators to those locations. The mobile generators were transported to the areas within Witzenberg like Ceres, Wolseley, and Tulbagh when load-shedding was scheduled in those areas. The municipality managed to transport the mobile generators to the different areas when load-shedding was scheduled between stages two and four. However, that was not an ideal situation. The challenge arose when load-shedding was scheduled beyond stage four because the Ceres and Wolseley schedules overlapped.

Mr David Nasson, Municipal Manager: Witzenberg Municipality, said the municipality added R1 million to its budget for the procurement of generators. A huge portion of the municipality’s budget allocated for the electrical infrastructure funds was set aside for upgrading the municipality’s substations. The Witzenberg municipality just completed the master plan of the infrastructure that needed to be upgraded. Thus, the municipality contributed an additional R1 million for the mobile generators. The generators would mainly service the Tulbagh, Wolseley and Op-die-Berg areas. The Ceres pump stations were covered in terms of generators. The municipality budgeted to upgrade its sanitation plants in the 2024/25 financial year because the cost was substantially higher than what the municipality could currently afford.

The Witzenberg municipality was one of the municipalities that were selected to receive assistance from the province. The existing challenge was that the Witzenberg municipality’s Eskom network was under severe pressure. While Eskom initially planned to upgrade the network in 2019, the upgrade was moved to 2030. Thus, the municipality and the Eskom service area could not start any new projects which made it difficult for the municipality to wheel electricity. The municipality was supporting several private initiatives to see how the electricity supply could be augmented. Those private initiatives were working on a hydro project, where the environmental impact assessments (EIAs) were conducted and the other initiatives were looking at solar energy. The municipality and the province were currently considering solar with batteries and conducting an EIA. A specialist service provider who was involved in similar projects with other municipalities was appointed to assist the municipality with the scope and specifications of the tender.

Follow-up questions
Mr Marais said the responses were haphazard and he was not sure if his questions or those of the other Committee members were being answered. It was noted that service providers concentrated on high-value tenders; hence the Independent Power Producers (IPPs) were introduced to several big companies as generators were expensive and small operators would not be able to afford them. He also noted that Eskom was supposed to upgrade the Witzenberg network in 2019 but ultimately moved the upgrade to 2030, which would cause a problem. Additionally, he noted that the municipality was considering solar energy but was confused because the other municipality was of the view that solar energy was unreliable in winter. It was unclear if there was a mutual consensus between the municipalities on how to solve the energy crisis. Some municipalities objected to using solar and storing the energy in batteries; while other municipalities were looking at solar with batteries as a solution. He was satisfied with the response that the municipalities were receiving conditional grants from the national government to subsidise the supply of water and electricity to the poor and people in informal settlements. The Committee would have to investigate why Eskom was blocking the supply of electricity through IPPs. Eskom was against IPPs while it did not have a solution to the energy crisis. The Committee should be very concerned.

Ms Murray said she failed to follow the municipality’s responses because they were not given immediately after the municipality’s presentation and discussion session. She repeated her follow-up questions for the municipality to answer.

Ms Nkondlo said she understood why the deviation process was implemented which was within the provisions of the Supply Chain Regulations and the Public Finance Management Act (PFMA). Did the municipality exclude its existing service providers in the initial tender process and would they not have placed a bid? While the appointment of the service provider was unsuccessful, understanding the procurement peculiarity was important. What was the status of water leaks in the Witzenberg municipality and how were they addressed? Did the municipality stick to the NERSA’s approved tariff or did the municipality increase its tariff to recoup its operating costs?

Ms Murray asked if the supply chain database was stored within the municipality or the province. Was the database reviewed and how often was it reviewed? What was the role of Provincial Treasury in the Western Cape in conducting oversight of the supply chain database and what role was it playing in the related projects?

Witzenberg response
Mr Nasson replied that the municipality had a team that dealt with water leakages in the Witzenberg municipality. Water leakages impacted credit control. Most accounts were in arrears because of the high levels of water consumption or unrepaired leakages. The municipality usually sent its team to assist households with high water consumption levels. As per the council’s adopted policy, a municipality should be reluctant to implement credit control if a person was on indigent relief. Rather, the municipality should make an assessment and send a team to inspect and determine the problem. If the indigent residents could not afford to pay the bill, a down payment arrangement would be structured with the finance department. While the municipality had applied to charge a higher tariff than what NERSA set, NERSA declined the tariff and the municipality was charging a tariff within NERSA guidelines.

The municipality has conducted some studies which included the solar study within the Witzenberg area. Several businesses used solar energy which was effective during the day. However, the batteries used for storing the solar energy were expensive. The province identified the Witzenberg municipality and informed them that it was looking into solar energy and batteries. The Witzenberg municipality further investigated solar energy and it was considering it as a solution to the energy crisis. Through various conversations and studies conducted on solar efficiency, the municipality discovered that solar energy was effective, especially within the Ceres area and the electricity consumption could be reduced for a certain period. However, the municipality had a challenge with providing electricity generated through solar during the peak period which was between 18:00 and 20:00 unless it had been stored in batteries.

The Witzenberg municipality received a conditional grant and added its funds to procure generators. With the minimal funds it had, the municipality searched for generators in the local market as the funds were not sufficient to procure a generator in the international market. Additionally, the level of expertise in the international market was not satisfactory. If the need arose, the municipality would seek guidance and assistance from Provincial Treasury on solar energy. Eskom's network supply to the Witzenberg area was under pressure, hence, the municipality could not explore the wheeling of electricity as an option. The municipality needed additional energy or electricity from Eskom which could not be provided. Hence, private initiatives had been formed to see how the municipality and the private sector could work together in solving the energy crisis in Witzenberg.

Mr Combrink said the municipality did not reach out to any international service providers as the tender was only advertised in the Western Cape newspapers. Additionally, it was unlikely that R1.5 million would be appealing to international service providers and the municipality could not conduct business in foreign currency. If the international service providers wanted to conduct business with the municipality, the transaction needed to be in rand value. If international players came across the advertisement in the newspaper or the municipality’s website, they would not be excluded from placing a bid. The existing service providers on the municipality’s database were not excluded from placing a bid. The legislation indicated that for all procurement above R200 000, a public tender process needed to be followed. The service providers needed to be registered on the municipality database or the National Treasury central supplier database. If the service provider was not on any database, the service provider needed to meet all the database registration requirements such as being tax compliant, not being a government employer, etc. The Provincial Treasury did not play any role in the tendering process even though it provided the funds. From time to time, the PT looked at the municipality’s supply chain processes to determine if there was any room for improvement and advised the municipality accordingly.

Since the municipality’s initial tender process failed, it proceeded with the deviation process to find a service provider because it wanted to spend the funds and needed generators. Unfortunately, the deviation process was also unsuccessful.

Ms Khanya Dingilizwe, Senior Manager: Electro-Technical Services, Witzenberg Municipality, said solar PV was intermittent. However, if it was paired with a battery storage system, the energy would be available for use when required. However, the baseload of solar energy was different to the baseload of coal-fire-powered stations and nuclear-powered plants but it was helpful to some extent. Using solar energy during the day would reduce costs and increase savings. The ultimate goal was to have an energy mix by tapping into any available energy sources and not fully relying on solar energy to assist in producing energy, allowing people to connect to the grid, and having access to energy that could be provided to customers. The municipality had challenges with Eskom for quite some time. If the municipality applied for an additional Notice of Maximum Demand (NMD) increase it would violate the upstream voltage limit. The project that the municipality was working on had been in the pipeline for quite some time but it was not materialising from Eskom’s side.

To achieve an energy mix that met its energy needs, boosted economic growth and opened an opportunity for developments to bloom in the Witzenberg municipality, the municipality compiled a master plan through the Municipal Energy Resilience (MER) funding. When compiling the master plan, the municipality knew that it had to identify the substations and infrastructure that needed to be upgraded to ensure that it was financially ready and also to get the infrastructure ready to be paired with the identified energy source. The master plan also spoke to the grid capacity studies which would advise the municipality on the methods or energy sources it wanted to pair into the network and how much it would withstand in terms of the technical limits and ensure that the municipality complied with the grid code for renewable energy. The municipality needed to ensure that it was not violating any of those conditions and remained grid-tied so that any system put into place would not negatively impact the Eskom network. The master plan was compiled in the previous year and completed in March 2022. The municipality was aware of the upgrades it needed to make in each substation identified to ensure that the municipality was ready when it had the financial means to tap into those resources.

The municipality has appointed a consultant to assist it with its energy plan. The energy plan entailed identifying all the available efficient renewable energy resources in the municipal area while also looking at the patterns of the current trends and future demand, identifying opportunities for the betterment of energy efficiency and developing policies and regulations that would ensure a smooth and seamless transition. The George and City of Cape Town municipality were currently busy with wheeling and IPP projects and the municipality wanted to learn from those projects. Witzenberg municipality’s policies would speak to what was learnt from the George and CoCT municipalities through their process of deploying energy resources to ensure that they had an energy supply.

The province would be assisting the Witzenberg municipality in easing the impact of load-shedding on its networks but the municipality had to meet the criteria set by the province to proceed to the next stage. To meet the criteria, the municipality had to identify a town or area within its network, where there was economic growth either in the agricultural or industrial sector that the municipality would relieve using an energy resource. The municipality chose a containerised solar PV system and a battery storage system which would assist in retaining the livelihood of the municipalities. If businesses were struggling, workers would be retrenched and that would have an impact on the livelihood of the municipalities and the economic growth. The municipality identified one of its substations and NMD system and it was currently busy with an EIA study for the land it identified. The municipality was preparing technical specifications for the PV system and the battery energy storage system to ensure that it was ready for the market and procurement process and ready to appoint a responsible service provider to place a bid and provide a system.

Follow-up questions
Mr Marais said two things caught his attention, the first one being that tenders needed to be in rand value which was one of the “stupidest” requirements that municipalities were forced to follow because the rand currency was weak in comparison with other currencies. The dollar-to-rand exchange rate was $1=R19/R20 and the pound-to-rand exchange rate was even higher. Consequently, the international service providers with the required expertise would out-tender South Africans if they had to transact in rands. Could there not be just one group of consultants appointed to advise all the municipalities on their energy plans in the Western Cape? Why should each municipality appoint a consultant? What assistance did the Provincial Parliament give to municipalities so they could have a single consultancy whose job was to look at the challenges they faced and advise them on how best to resolve the challenges?

Witzenberg response
Mr Nasson agreed with these remarks. The Department of Provincial and Local Government (DPLG) was considering appointing a panel of service providers to assist all municipalities.

The Chairperson thanked the Witzenberg municipality representatives for their attendance.

Drakenstein Municipality presentation
Mr Louis Pienaar, Executive Director: Engineering Services, Drakenstein municipality, said the Drakenstein municipality’s first priority was to provide sustainable service delivery which focused on reducing the risk of equipment failures and ensuring continuous service delivery. The municipality installed generators to ensure that basic services could be provided through water and sewer pump stations, wastewater treatment works, etc. Generators, solar panels, and inverters were installed at the municipal offices and service desks. The municipality installed Uninterrupted Power Supply (UPS) backup systems at all of its major traffic lights. The municipality needed to have an additional diesel budget for its generators. The municipality received R6 million from the EMLR grant and used it to install two generators at the Paarl WWTW, one generator at the Conrad water pump station and one generator at the Perold water pump station.

The Drakenstein municipality matched the R6 million from the EMLR grant and equipped the Paarl Civic Centre with a generator. The old generator would be converted into a mobile unit which would be used at the Paarl WWTW. An additional generator would be procured for the Market Street Engineering Services Management building. Similarly, the old generator would be converted into a mobile unit as well. The Drakenstein municipality has already procured a generator for the Paarl-East office and was in the process of procuring generators for the Mbekweni satellite offices. The municipality installed UPS backup systems in 37 of the 47 main arterial traffic lights through an underground system. The underground smart systems could not be interfered with or vandalised because they were programmed to alert the municipality and ultimately law enforcement through the municipality if they were tampered with. The outstanding UPS backup system installations would be made by the end of 2023. Traffic has been flowing freely during load-shedding since the municipality installed UPS backup systems in its traffic lights.

In 2023, the Drakenstein municipality received 161 registrations for SSEGs, solar panels and inverter units mostly from affluent areas. The rise of load-shedding in the past two years has resulted in a 51% decline in electrical sales which was caused by business units ultimately resorting to the use of generators during load-shedding. The budgeted 2023/24 electricity revenue of R1.7 billion was subsequently revised to R1.5 billion after considering the load-shedding crisis. Bulk purchases from Eskom were also adjusted from approximately R1.1 billion to R1 billion.

The Drakenstein municipality was open to conducting business with Independent Power Producers (IPPs) and the municipality was currently in various discussions with potential IPPs. The IPPs would require a detailed funding model and cost-benefit analysis because the municipality could not respond haphazardly by entering into irresponsible long-term agreements using the public’s money. The Drakenstein municipality was also investigating electricity wheeling options.

Mr Gert Combrink, Chairperson of the finance portfolio and Deputy Mayor, Drakenstein municipality, said the challenges faced by the Drakenstein municipality were similar to the other municipalities’ and was eager to see the interventions introduced by the other municipalities.

(See the presentation for more details)

Discussion
Mr van der Westhuizen thanked the Drakenstein municipality for its initiative with the UPS-powered traffic lights and said they increased productivity and reduced frustration levels during load-shedding. The UPS-powered traffic light initiative implemented by several municipalities was a huge improvement and allowed traffic officers to focus on other important tasks instead of managing traffic. What was the cost of a 700kVA generator, including the installation and adaptations to the business’ electricity reticulation network? How would the municipality’s lost revenue be recovered when people were switching to SSEG? Did the municipality have a backlog for approving SSEG applications and inspections? Was it able to keep up with the backlog?

Mr Marais commended the Drakenstein municipality and its mayor for its efforts and active involvement in solving problems. However, he was concerned that the municipality was mainly using generators which fed off the grid and would cause spikes in energy consumption leading to more load-shedding. Why did the municipality use generators instead of solar energy or inverters which did not need to be connected to the grid? How would the municipality recoup its lost revenue? While the metro imposed an additional tax of R37 a month on consumers, which the poor could not afford, what was the municipality’s plan to recover its lost revenue? Did the municipality take out the R6 million it matched from its reserves and did it have any reserves left? Did it make an application to the Minister to make funds available to Drakenstein municipality so that it could pay all the costs it has incurred? Would the losses made be recouped by charging consumers who were already overburdened? What was the nature of the IPP discussions and how far were they?

Ms Nkondlo asked for the cost of the UPS backup systems. Were they locally produced or manufactured internationally? Would the municipality increase its tariff above the NERSA recommendation in an attempt to cover its operational costs? Where did the municipality get the additional R6 million used to secure additional generators? Was the money from its capital expenditure budget or did the municipality secure a loan?

Mr C Dugmore (DA) recalled that the Committee had informed various municipalities that using alternative energy suppliers would affect the financial viability of the municipality because electricity sales constituted a huge portion of municipal revenue. What was the percentage of the revenue generated from electricity sales? What was the credit control policy as it pertained to electricity sales and while a verbal answer was acceptable, the Committee preferred a physical copy of the credit control policy? Municipalities were challenged because the indigent residents were in arrears on their water and other bills. When those indigent workers bought electricity, they only received electricity units worth a small portion of the amount they paid and the other amount would be used to settle their outstanding bills. Could the municipality provide some clarity on the matter? It was concerned that CoCT refused to abide by the NERSA approved tariff and implemented a charge above the approved tariff. What was NERSA approved tariff and did Drakenstein comply with it?

Drakenstein response
Mr Pienaar thanked the Member for his comment on the UPS traffic lights and agreed that it was a huge improvement that assisted motorists. The price of the generator depended on what was added to the generator. The price included installation, security measures, fencing and some equipment sold with the generators. The cable links and the position of the generators also influenced the price of the generators. The 500kVA generators installed at the Paarl WWTW had a VAT inclusive cost of R3.2 million. The 650kVA generator installed at the Market Street Engineering Services Management Building had a cost of R1.7 million and already had an enclosed area and existing cables but required a generator replacement. The loss of revenue was affecting the municipality and it had to budget accordingly and revise its forecast on expenditures, loans and the related repayments. It had registered SSEG applications as it received them and thus had no backlogs.

Mr Combrink noted the R6 million the municipality matched to secure additional generators was from its capital reserves. The municipality had set aside R12 million for the 2023/24 financial year before it received the R6 million from the EMLR grant. Thus, the municipality made a saving on its projected budget for the next financial year. The municipality did not take out any additional loans and the municipality’s most recent loan was taken out in 2018. The income of R1.5 billion was not purely revenue because the municipality had to pay R1.1 billion to Eskom, leaving the municipality with a revenue of R400 million. However, the municipality had to cover system repair costs and pay salaries, leaving it with revenue of R200 million to spend on other things. The Drakenstein municipality was very strict on its water and electricity losses. Its water loss was currently at 16% and the national norm loss was between 15% and 30%. Its electricity loss was at 6.7% and the national norm loss was between 7% and 10%. Personnel costs were currently slightly above 29% of the budget and the national norm was between 30% and 40%. All savings made by the municipality covered the loss it incurred. The Drakenstein municipality also decided not to fill all the existing vacancies to save on expenditure and make up for the loss it incurred.

Mr Pienaar replied that the municipality used diesel generators and had investigated solar energy as an option for generating electricity but its power did not compare to the power of generators, especially in the winter season and evenings. One solar installation had already been made in Wellington and it was used to charge the UPS-powered traffic lights. The other UPS-powered traffic lights were charged from the grid and did not have any generators charging them.

The smart-like chambers on the UPS systems were manufactured in Gauteng. However, the equipment, he assumed, was manufactured outside South Africa and he was not aware of any local manufacturers. The municipality manually installed the UPS equipment through its engineering, roads and traffic and electric service departments and outsourced the installation to several contractors.

NERSA proposed a tariff increase of approximately 18.6%. However, Drakenstein’s finance department only increased the tariff by 15.1%. The municipality did not engage with the NERSA on the installation of generators but engaged with it on its tariff increase. The cost of the UPS battery system was R80 000 per traffic light but the cost would be confirmed and the cost would be spread over two to three financial years.

Mr Combrink added that the municipality did not increase its tariff above the NERSA approved tariff increase. The initial tariff set by NERSA was 18.6% but it was subsequently revised to 15.1%. The Drakenstein municipality charged a tariff of 15.1%. The municipality had different tariffs for the different amperages of the circuit breaker in a household. All indigent people were on 20 amperes (amps) and the first 400 kilowatts (kW) were charged at a low tariff. If the energy used exceeded 400kW, the tariff would increase per kilowatt-hour (kWh). Two years ago, the municipality allowed indigent people to get the 30-amp breaker without charging them a fixed cost while other people paid a different tariff. Then tariffs went up to 90 amperes. Each indigent registrar enjoyed the following free goods or services: 80kWh free electricity per month, 6 kilolitres (kl) of water, no property rates on the first R750 000 value of their house, sewerage and refuse removal.

The main reason people were in arrears as per Drakenstein’s analysis was due to the overuse of water. Some people used up to 50 kl of water. If a person was in arrears for 30 days, they would be blocked at a ratio of 70/30 and if they were in arrears for more than 30 days, they would be blocked at a ratio of 90/10. The municipality also conducted a monthly analysis to determine which people were excessively using water and paid visits to determine if they had any leakages. Fixing existing leaks such as toilet and tap leaks was crucial because it was more beneficial for the municipality to fix those leaks and avoid writing off the outstanding debt when the people re-registered as indigent residents after the outstanding debt was left to grow throughout the year. Thus, the municipality fixed those leaks unless the leaks were structural because the municipality could not repair private structures but could repair toilet rubbers, toilet washers, and tap rubbers.

Follow-up questions
Mr Marais said he was more concerned about the long-term solutions to the existing energy crisis and not short-term solutions. Was resolving the energy crisis beyond anyone’s financial and intellectual competence? If so, what would be the long-term goal and how would the energy crisis be resolved? Generators could never be the primary solution to the energy crisis as they were expensive when diesel was used. What was the answer to the complex energy crisis? Does the municipality have any large informal settlements that consume water and electricity? If so, how was the municipality solving the problem as it could not collect any revenue in those areas? Would the working class then subsidise the informal settlements or does the municipality get conditional grants for informal settlements within its municipal boundaries?

Mr van der Westhuizen asked if Drakenstein conducted on-site inspections of grid-tie inverter installations. What was its policy on installing grid-tie inverters? Has the municipality received noise complaints or complaints about the exhaust gases produced by generators? Did the municipality have to adjust its noise regulations? Drakenstein had the most lenient package of services for indigent residents in the country and it was pleasantly surprising how it assisted the indigent.

Mr Nkondlo said she was interested in the system that the municipality used to identify water leakages and wondered if other municipalities had implemented the same system. What type of a system did the municipality use to detect water leakages and how was the system triggered for the municipality to visit residents and investigate the existence of water leakages? Other municipalities could also benefit from that system.

Drakenstein response
Mr Pienaar replied that everyone was concerned about finding a long-term solution to the energy crisis. The electrical services senior manager would give background on this.

Mr Charles Geldenhuys, Drakenstein Senior Manager: Electrical Services, said a problem could only be solved once it had been identified and ring-fenced. The problem was not the supply of energy in the daytime, evening, or peak times but it was about electricity demand which was Eskom’s problem and had to be addressed. A baseload i.e. one or two Koeberg power stations, a gas plant, etc. which operated 24/7 was required to resolve the demand problem. Without a baseload pushing up the demand, the problem would not be resolved. Drakenstein was looking for alternatives to determine if it could handle its baseload. The municipality did not want to rely solely on solar energy because it could only resolve one of the seven or nine issues. Solar energy could be stored in batteries but the equipment was expensive and other issues such as vandalism and theft existed. A baseload was a solution to Eskom’s problems. The Drakenstein municipality was considering several energy solutions so that it could operate independently without relying on Eskom. It was not ideal to patch the energy problem with batteries and solar panels because it was a space-consuming solution. The municipality supplied electricity to all its informal areas and it was conducting some investigations to determine if it could assist all its consumers during load-shedding periods.

Mr Pienaar confirmed that the municipality conducted SSEG inspections on-site. The municipality did not have any backlog on SSEG inspections. It has not received any complaints about the fumes and the noise produced by its generators. Generators have been installed at the Paarl WWTW and at pump stations which were not close to residential areas except for the Civic Centre which was not too close to residential areas. The municipality has received a few complaints about noisy generators owned by businesses in the central business district (CBD). The solution was to install noise-contained units which were quite expensive. The municipality did not amend its bylaws to accommodate the generators.

Mr Combrink said the politicians received noise complaints on the generators first. The municipality bylaw had a noise pollution level and the municipality tested specific generators to determine if they exceeded the noise level. The process was then handed over to the administration division who contacted the relevant owners and requested them to install noise damping parts. Western Cape had an indigent package of R1 450 per month. The municipality received an equitable share grant from the national government and used it to fund the indigent packages. The indigent packages were not paid for by people on the street or by taxpayers. The equitable share grant was also used to service 43 informal settlements in the municipality. The municipality conducted a test on the water meters of one of its informal settlements by dividing the amount of water used by the number of households in the informal settlement. The test determined that each household used an average of 3.4kl which was lower than the average 6kl provisioned for indigent residents. If the people in the informal settlements were registered indigents, they received 80 units of electricity and had to buy additional electricity from the municipality if the need arose.

Drakenstein municipality used a deviation report to detect water leakages. An Excel deviation report was compiled every three to four months and it detailed the water usage for specific areas or indigent residents. Once the data on the report had been sorted, the households with the highest water consumption levels were identified and the list sent to the finance team which contacted the engineers and requested them to visit specific households where there was a water usage spike as evidenced in the graph extracted from the Excel spreadsheet. Alternatively, if a customer complained about their water bill, they would be asked if they had a swimming pool, a large garden, or any leakages in their household. Such questions sometimes upset a lot of customers but if customers complied by closing all taps in their home, ensuring that the toilet was not running, and taking pictures of their water meter one hour apart, they could determine if there were water leakages in their household. If the water meter reading changed, then a leakage existed and a plumber would locate the leak. The plumbers used very specialised equipment to locate the leaks and the Drakenstein municipality did not have access to such equipment. The plumbers could see what was happening underground. A certain customer had a water leakage three meters under his office and had to dig a big area to resolve this. While he used 100 kilolitres initially, the water usage decreased over three months to 30 kilolitres. As a long-term solution, the municipality was working with certain people but Eskom was standing in the municipality’s way. In the Free State, a certain energy group was blocked from supplying energy in four towns. Eskom should get its act together and allow private energy producers to connect to the grid and supply energy to the municipalities.

Cape Winelands municipality
The Chairperson noted that the Cape Winelands municipality had sent a message to inform the Committee that it would not be able to attend the meeting. The Committee would follow up to find out why they forwarded an apology at such short notice. It would discuss the matter during its resolution session.

Mr Daniel Lubbe, Municipal Manager, Langeberg municipality, informed the Committee about the disaster currently happening at the Swellendam municipality building and perhaps that could be the reason the Cape Winelands municipality was in a state of readiness. The Swellendam municipal buildings were on fire, huge protests were happening and the N2 had been closed. The Swellendam municipality neighboured the Langeberg municipality and it bordered on the Cape Winelands municipality. The Langeberg municipality was in a state of readiness to protect all of its municipal structures and assets. All emergency services, disaster prevention, fire prevention, and law enforcement were in a state of readiness. If people were unable to join the meeting, it was probably due to the Swellendam crisis which was captured in the media.

The Chairperson thanked Mr Lubbe for the update and said he was not aware of what was happening as he was chairing the meeting.

Stellenbosch Municipality presentation
Mr Shane Chandaka, Stellenbosch Director of Infrastructure Services, said the Stellenbosch municipality received an EMLR grant of R6.175 million and immediately went out on a full tender for backup generators for key water pump stations in high-lying areas. The bid was advertised on 21 April 2023 and a compulsory tender clarification meeting was held on 8 May 2023 attended by five potential service providers. The bid closed on 22 May 2023 but the municipality received only two bids. Unfortunately, the bids received failed to meet the pre-qualification criteria which led to the cancellation of the bid. As the financial year-end of 30 June 2023 was fast approaching, it decided to proceed with a deviation process to try and meet the deadline. However, the Bid Adjudication Committee (BAC) did not approve the deviation because of the legal status inconsistencies of the bidder. The BAC suggested that the municipality undergo another full tender process and thus the municipality immediately contacted DPLG to request the rollover of funds. It forwarded all the required documentation to DPLG. Its third procurement process will close on 21 August 2023.

The municipality would procure generators intended for high-lying pump stations which would fill reservoirs during extended load-shedding periods. The critical treatment plants had backup generators and investigations were currently being conducted on a solar backup system. It had installed rooftop PV at four municipal buildings as part of its Alternative Energy Strategy. Through its funding, the municipality appointed a lead consulting firm to investigate various aspects of load-shedding mitigation. The municipality successfully awarded a Supervisory Control and Data Acquisition (SCADA) telemetry tender in July 2023 for the upgrading of its telemetry system. The municipality currently had an investigation on upgrading its master and switching substations and gears and it was also conducting a study on battery storage backup options.

The municipality also partnered with the province on the MER initiative and used some funding it received to compile the energy master plan which was completed and approved by council. It was participating in the Municipal Pool Buying Initiative which was currently in its early stages and PricewaterhouseCoopers (PwC) was appointed as lead consultant of the initiative.

Discussion
Ms Nkondlo asked the municipality to explain what a lead consultant was. By lead consultants, was the municipality referring to the transactional advisors appointed by the province to drive the energy crisis programme in the identified municipalities? Stellenbosch municipality was amongst the group of municipalities identified in 2019/20 to be piloted under the energy resilience programme and given funding to conduct all feasible studies on energy resilience. Was the municipality only completing that master plan now or was it referring to a different master plan? Could it explain the legal status inconsistencies identified by the BAC when it disapproved the municipality’s deviation process?

Mr Marais asked if the municipality escalated its problems such as compliance issues, IPP tender size requirements, scarcity of the required competencies, technical knowledge and intelligence issues, to the three national ministers of energy? The ministers were paid huge salaries to solve those problems and not the municipalities. Has the municipality informed the ministers or Premier that it hardly received any bids for its tenders? Did the municipality inform the ministers that the legislation placed international service providers in a position where they could out-bid local service providers because the exchange rate was in their favour but transactions were required to be in rand value?

Stellenbosch response
Mr Chandaka said the lead consultants were not the transactional advisors. Lead consultants were project management consultants recruited to assist with the overall management of the MER programme, especially the Municipal Pool Buying Initiative which was a sub-project of the MER programme. The transactional advisor tender appointment has gone through the Bid Specification Committee (BSC) and one of the Stellenbosch municipality officials was asked to sit in. They have also gone through the bid specification for a project officer which was an electricity or energy consulting firm. The energy master plan largely looked at the different sources of energy and their applicability to the Stellenbosch scenario. The energy master plan also looked at the updates of the previous plans. The electrical infrastructure master plan largely looked at load distribution networks and it was completed in June 2023. The energy master plan for the MER project was concluded in November/December 2022. A lot of feasibility studies took place on battery storage and the energy master plan as conducted by Council for Scientific and Industrial Research (CSIR).

The municipality needed to have a good picture of the state of its infrastructure and substations and identify what needed to be upgraded. The municipality successfully awarded the SCADA telemetry tender and its lead professional firm was assisting with the process and investigating the different aspects of the load-shedding mitigation strategy. A step-by-step methodical scientific approach needed to be followed for load shedding mitigation. It should be noted that there was no regulated scientific approach set out for municipalities in mitigating load-shedding. The process unfolded as it was piloted, and a lot was discovered.

In the first round of the full tender process, two bids were received and both bidders were unresponsive in terms of compliance. When the municipality proceeded with its deviation process, it was searching for bidders that could meet the 30 June 2023 deadline, had stock on hand or could readily get the stock, install the generators and receive the related payment. It seemed there were only a few people in the market who thought they could deliver on the tender. The first bidder did not meet the functionality requirement of the tender. It should be noted that the grant was put together to respond to the energy crisis and that all the municipalities simultaneously embarked on recruitment drives to procure generators. Consequently, the market was drying up at that time as it could not respond quickly to this demand or maybe the bidders preferred larger tenders.

Follow-up questions
Mr van der Westhuizen asked if the municipality was using ripple relays to switch off geysers in certain parts of the municipality to manage the maximum demand required during load-shedding. What was its experience in using the ripple relays? How has the experience enabled the municipality to reduce maximum demand? It was known that the network was under pressure after load-shedding because all appliances were suddenly switched on, thus increasing the kVA demand and resulting in a higher charge on the municipality’s monthly account. Could the other municipalities benefit from the use of ripple relays and potentially reduce the spike of electricity after load-shedding?

Mr Murray wondered if Stellenbosch would be the first municipality to operate off the grid. Has the municipality engaged with Wesgro in its response to the energy master plan? Wesgro had a massive focus area on the matter, particularly because of its focus on green hydrogen and perhaps there could be synergies.

Has there been an appeal to international stakeholders, businesses, or diplomats to address the infrastructural needs of the municipality? Did the municipality have training or skills development requirements to get its project off the ground?

Mr Nkondlo asked for clarity on the market appetite and its capacity to meet the existing demand. Was the timing of the grant one of the reasons why the municipality did not receive bids or was there a shortage of generator service providers? Has Stellenbosch municipality charged a tariff exceeding the NERSA-approved tariff of 15.1% or did it follow the NERSA tariff guideline?

Stellenbosch response
Mr Chandaka said the Stellenbosch municipality has not escalated its challenges to the ministers of energy. Since the tender and the funding received were specifically for the procurement of generators and not for an IPP, the municipality simply called for bids and when the market failed to respond, it proceeded with the deviation process. It did not see the need to escalate the matter.

Mr Mark Benson, Stellenbosch Head of Planning: Electro-technical Department, said the municipality still used ripple relays. Ripple relays were mainly used for load shifting. When the municipality had peak demand during a peak period, the demand was shifted for supplying hot water to citizens. The ripple relay simply shifted demand loads from peak to non-peak times. The installation of solar PVs and inverters also caused spikes in the network when the power returned because the batteries needed to be charged and that was a challenge that was yet to be managed, like the geyser challenge.

Mr Chandaka said the municipality had not engaged with Wesgro on green hydrogen but engaged with it on other initiatives in the municipality. Through the Stellenbosch University, it was investigating possible biomass facilities and it was in the feasibility stage of the investigation. The municipality did not have any international appeals as municipalities were engaging with the province on the Municipality Pool Buying Initiative to see if it would eventually result in a call for IPP proposals either in the form of a large plant, several smaller plants, or an international appeal. It was yet to be seen how that process would unfold and all municipalities were participating in that initiative.

The load-shedding mitigation and alternative energy initiatives were taking a toll on municipalities, especially on the electrical officials as they had to investigate and spend efforts on various aspects. The municipality envisaged that there would be training sessions organised to keep up with the different Eskom initiatives around the national regulatory services (NRS) legislation. The municipality attended the training courses or workshops when they became available. There could be some dedicated training required in the future and capacitation for municipalities as they evolve in having dedicated alternative energy units.

The timing of the grant was the reason Stellenbosch did not receive any responsive bids because the municipality received the grant midway during its financial year with a limited time frame for the municipality to procure generators and make the necessary installation. With the other municipalities simultaneously procuring generators, the demand for generators exceeded market supply. Perhaps the bidders with no stock on hand needed to import the generators but because they had to be installed by 30 June 2023, they would not have been able to fulfil the bid on time. Hopefully, the demand would be low in the second bidding process which would close on 21 August 2023 and it would see which service providers were interested in submitting a bid.

Stellenbosch used the NERSA recommended tariff of 15.1%. The tariff was included in the Integrated Development Plan (IDP) presentations and consultations with all wards before the tariffs for 2023/24 were adopted.

Breede Valley Local Municipality (BVM) presentation
Mr Jaco Steyn, Director: Engineering Services, Breede Valley Municipality, said the Breede Valley municipality was allocated R950 000 in 2022/23 from the Energy Relief Fund. However, its financial requirements exceeded the allocation it received. The municipality procured two generator sets with the allocated funds. It has started with the installation of standby generator sets at critical service delivery points at Stettynskloof Dam, Rawsonville WWTW, Worcester WWTW, Touwsrivier WWTW, Worcester Administration Center, Mobile Generator used in 21 wards, Zwelethemba Sewer Pump Station, and Noble Park Sewer Pump Station. Installing a generator in the administrative office would require re-routing the current electricity supply, making room for diesel cabling, and a generator building, adding up to a cost of R3.8 million, which the municipality would fund. The generator would be permanently installed in the administrative office.

(See the presentation for more details)

Discussion
Ms Nkondlo said she appreciated the slide that showed the population size of BVM as it was important for forecasting purposes. Did BVM consider its long-term energy need in its current energy master plan? What percentage of its energy programme was the allocated amount of R950 000 able to fund? Was there a strategy against water leaks? If so, could BVM expand on how it addressed water leaks in households?

The Chairperson said he had noticed that the generators at the Zwelethemba and Noble Park Sewer Pump Station were not covered with any roofing or similar structure. Would the weather not be a problem?

Breede Valley response
Mr Steyn said the municipality’s master plan had been approved and was submitted to council in March or April 2023. The master plan looked at the operational needs, maintenance needs and the augmentation and extension of the existing electrical network. Additionally, BVM analysed the current supply and demand and discovered that a supply challenge existed in certain areas and thus had to augment and upgrade the system accordingly. However, in other areas, the system was fair and it could supply the demand for years to come. If there were major developments within the municipality, such as the Transhex Catalytic Project housing development which entailed approximately 8 500 properties developed as affordable housing, it was determined that the municipal grid could supply the demand, but Eskom would not supply the town of Worcester with electricity through the existing grid. The upgrading of the grid from Villiersdorp to Worcester would cost approximately R500 million and the amount would be higher if the cost estimate was to be reviewed. BVM was currently in discussion and hoped to get a clear answer and commitment from all spheres of government on the expenditure of the supply upgrade to Worcester. The SSEG policy of the council allowed community businesses to make use of solar PV and the municipality approved a rate to be paid to private owners if they put the electricity back in the grid. If electricity could not be stored in batteries, electricity would not be available in the evenings and during load-shedding.

BVM had plans in place to reduce non-revenue water leakages. It was currently busy with the replacement of the old asbestos cement water pipes which it replaced with High-Density Polyethylene (HDPE) pipes using trenchless technology. The municipality was also busy with the replacement of water meters. Detected water leaks were replaced as soon as possible. The generator sets were enclosed within a box to protect the generator from weather elements. For safety and security reasons, the municipality replaced the wire fencing enclosing the premises where generators were located with heavy-duty fencing and the premises had alarm systems.

Follow-up questions
Mr Marais said today’s society was very violent and filled with criminals. How does BVM ensure that the generators were protected? Did it receive assistance from the police or armed forces? Generators were expensive and needed to be kept in good condition and protected from vandalism. What measures were in place to prevent vandalism such as stealing of copper cables and other components which were ultimately sold to scrap yards)? Were generators a sound investment? Were the generators in Zwelethemba and Nobel Park Sewer Pump Stations adequately shielded and protected from criminal activities?

Breede Valley response
Mr Steyn replied that all municipalities had a challenge to protect their municipal assets. The municipality previously used security guards to protect the municipal premises but it could not afford the security bill. As a cheaper but efficient alternative, the municipality decided to install closed-circuit television (CCTV) cameras, alarm systems and pepper spray within its buildings. The wire fencing serving as the parameter fencing was also replaced with heavy-duty concrete fencing which was 2.4 meters high, making it difficult to go through or over the wall and in certain sites, wires were placed at the top. CCTV cameras were installed at the Zwelethemba and Nobel Park Sewer Pump Stations. CCTV cameras were also installed at the Zwelethemba swimming pool and if there was any movement from the remote sites, security and municipal law enforcement were alerted to respond to the matter. The generators at the Zwelethemba and Nobel Park Sewer Pump Stations were enclosed in steel boxes and once a criminal was on the site, they had to go through a wall that was difficult to climb and would need to attempt to open the steel box. The measures implemented were within the municipality’s financial means.

Follow-up questions
Mr Marais asked if an alarm system connected to an armed response would not be a better security measure because if anyone touched the generator boxes, the alarm would be triggered. Criminals usually covered their faces with masks and could not be identified on camera but if a loud-sounding alarm was triggered, it could scare them away. Why was the municipality not making use of an alarm system?

Breede Valley response
Mr Steyn said the alarm suggestion was good because the doors in the municipality had a monitor that was set off if the door was opened and the armed response team would respond accordingly. BVM would investigate if the alarm systems could be installed on the steel doors of the generator boxes in Zwelethemba and Nobel Park Sewer Pump Stations.

Langeberg Local Municipality presentation
Mr George Lotter, Langeberg: Manager: Electrical Engineering, said the Langeberg municipality needed approximately R5 million in emergency funding but it was only allocated R350 000. It placed a tender for a 300 kVA transformer for its Montagu WTW and it had a cost of approximately R1.1 million. A service provider was appointed and the handover process took place in July 2023. Delivery and installation of the equipment was expected to take place by October 2023. Langeberg municipality did not receive any funds from the energy infrastructure allocation and thus the municipality used its funding. For its energy infrastructure, it budgeted R2 million for 2022/23, R9 million for 2023/24 and R9.5 million for 2024/25, which would be primarily used for water and sewer systems.

Tiger Brands in Ashton supplied the municipality with two generators which were installed at the Ashton water pump station and WTW. Lactalis (Parmalat) also supplied one generator and it was installed at the WTW. While the generators supplied were beneficial to the municipality, Tiger Brands and Lactalis (Parmalat) also had water requirements and thus the arrangement was mutualistic. The municipality has requested co-funding from the Western Cape government which it would use to install solar PVs at the municipal facilities. The installation of solar PVs would result in savings in generator maintenance and running costs and reduce the municipality’s carbon footprint. The solar PV project would take place over three years. The first phase of the project on administrative facilities had an estimated cost of R10.6 million. The second and third phases would be at the waterworks and the sewerage works facilities respectively.

The SSEG regulations and application form were recently updated and were available on the municipality website. Langeberg municipality has an approved feed-in tariff of R0.87/kWh. The municipality had a high volume of SSEG applications due to load-shedding. Some of the submitted SSEG application forms were incomplete or had incorrect information. The administrative team had limited human resources and worked under pressure to process and approve the SSEG applications. Langeberg and SALGA were currently investigating an online application solution.

Langeberg has received approval from council to procure transactional advisors to assist the municipality in procuring alternative energy. Another municipality had paid R23 million to procure transactional advisors. The municipality partnered with SALGA and its partners, Sustainable Energy Africa (SEA) and the Southern Africa Energy Program (SAEP) who would assist it with regulatory requirements and possible funding sources for procuring transactional advisors. Wheeling policy and tariffs could be adopted from the CoCT or George Municipality and implemented in Langeberg Municipality.

Discussion
Mr van der Westhuizen said he had noted that the municipalities, including the Langeberg municipality, required individuals who were interested in SSEG and rooftop connections to seek approval from the municipality before proceeding with installations. What did the approval process entail? It should be noted that the ongoing load-shedding could pressurise people to proceed with installations and connecting to the grid before they could apply to the municipality. What did the municipality require before proceeding with installations? Did the municipal electricians conduct site inspections before approving the applications and were applicants required to pay for the inspections? What were the practical steps of connecting to the grid? Did the municipality have a published list of its preferred inverter brands? What were the measures implemented to deal with people who failed to use the pre-approved brands?

Ms Nkondlo asked how the municipality planned on meeting the shortfall in the funds required to procure generators. Did the municipality say it would receive R23 million from transactional advisors? If that was not the case, could the municipality explain what the R23 million was for? Did the municipality have any wheeling requests? If so, how many wheeling requests did the municipality receive? How much revenue could be made from wheeling contracts?

Langeberg response
Mr Lotter said the municipality required customers to make SSEG applications before procuring any equipment. The applications would then be authorised and a letter would be issued, authorising the installation of the equipment. Langeberg did not have a specific list of pre-approved inverter brands or suppliers. Before the SSEG equipment could be connected to the grid, it required an NRS 097 certificate certified by the NRS. If a customer had equipment that was not NRS certified, the municipality recommended an off-grid installation. Once the customer filled and submitted the form, the municipality responded within two weeks with a letter authorising the installation. Afterwards, the customer was required to fill in a commission form. The municipality evaluated the information received, visited the site and commissioned the system with the customer. At times, the municipality could not make a proper evaluation because the customer might have provided incorrect or incomplete information. Once the commissioning process had been concluded, the municipality issued a final letter of approval for the system and if the customer chose to connect to the grid, an agreement had to be signed with the municipality. The municipality made provision in its capital reserves and budgeted some funds to cover the shortfall required to procure generators for its facilities.

While Langeberg municipality was a few steps behind in appointing a transactional advisor, the municipality was keeping a close eye on what the other municipality had done. The municipality that had secured a transactional advisor worked with SALGA and its partners. The tenders received by that other municipality amounted to R23 million, being the cost of the transactional advisor. The transactional advisor would take the municipality through the whole process of identifying its needs, compiling documents that would go to the market, facilitating the process of getting bids from the market, evaluating and advising council on the preferred alternatives and getting council's approval. The procurement of large-scale energy from Eskom and other sources was quite complicated and the transactional advisors would assist with the financial, environmental, legal, and technical aspects of the procurement process. R23 million was paid to the transactional advisor to assist the municipality with the procurement process of securing alternative energy. Langeberg was aware of other workstreams like the MER programme with pilot projects by candidate municipalities. Unfortunately, Langeberg municipality was not part of MER but it was following closely, hoping to learn from it and implement it in the municipality.

Langeberg received wheeling enquiries from two customers who were interested in wheeling within the municipality's network. It had two other customers testing the possibility of getting electricity wheeled from outside Eskom's network to Langeberg municipality. That option was more for the larger customers with a national footprint. Langeberg also had a constrained network in its area and thus wheeling from the outside might congest the Eskom network. Wheeling through Eskom's network was thus impossible. However, wheeling within the Langeberg area might be possible.

Mr Lubbe said Mr Marais rightfully questioned the role of the Western Cape provincial government in assisting municipalities in the appointment of transactional advisors. It was ridiculous for every municipality to place a tender and appoint transactional advisors at their own cost. These were funds that the municipalities did not have. If a municipality had to pay R23 million, it would use funds from its capital investment budget; thus, using the funds urgently needed for infrastructure and service delivery. If there was a service to be provided by the provincial government on behalf of the local municipalities in the Western Cape, either the province or the districts should appoint transactional advisors on behalf of municipalities and assist with the related funding. Municipalities did not have the luxury of additional funds for appointing expensive transactional advisors.

Another issue was that the municipality received R350 000 from the R5 million it requested and Ms Nkondlo was justified in asking how the shortfall would be covered. The municipality covered the shortfall by using funds from the current year budget as it needed to buy generators and the allocation of R350 000 was insufficient to buy a generator which cost approximately R1.1 million. The municipality had to cover the costs if it did not receive sufficient funding from the Western Cape government or through other means because it still had the responsibility of delivering services to customers. Langeberg extensively invested in its projects and asked for co-funding or grant funding where possible. That would be the funding model for municipal infrastructure for three years.

To provide backup to conventional power, the municipality had to use funds from the operational budget and road fund to purchase diesel especially when load-shedding stages intensified unexpectedly. Municipalities were facing the same challenges but tried to manage the situation and continue with service delivery.

Follow-up questions
Mr Marais said the municipalities should forward their challenges to SALGA which should subsequently present them to the National Council of Provinces (NCOP). SALGA’s role was unclear if it could not escalate the municipalities' problems to the NCOP which interacted with the Ministers who had decision-making powers.

The Minister of Energy and the two Ministers who played a role in energy supply should be involved in assisting municipalities to access the capacity and expertise required to explore mass gas. Mass gas had power-generating capabilities and was available in the Karoo. Mass gas was at the disposal of municipalities but no connection had been established between the national office and municipalities in assisting them with the energy crisis. If private sector companies were assisting municipalities, why were municipalities not considering mass gas as an alternative source of energy?

Langeberg response
Mr Lubbe said he always tried to plead the case on behalf of local municipalities in the Western Cape so they could be resilient against load-shedding. When he previously attended a Municipal Managers forum held in Saldanha, a presentation had been made on grant funding available to municipalities. The Langeberg municipality immediately responded by submitting a funding application for its three-year municipal infrastructure programme focusing on libraries, city halls, and municipal centres. The programme would also focus on installation of solar panels at waterworks and WWW, making solar its first source of energy, followed by conventional energy from Eskom and ultimately diesel generators. The ultimate resilience depended on having all three energy sources resolve the load-shedding challenges of municipalities.

It was important for the municipality to have access to co-funding, which was the biggest risk that a municipality could have. Langeberg municipality always requested co-funding from the provincial and national government or other grantors because it showed the municipality’s determination to invest in what it believed in. Langeberg did not want its investors to leave. Thus, the municipality engaged private investors in discussions and invited them to work on solutions. Private investors provided municipalities with generators and in return relied on municipal services. Once the private investors provided the municipalities with generators, the municipality was responsible for the full maintenance, safekeeping and continued generator services. In return, the private investors received the services they duly paid for from the municipality.

The Chairperson thanked all the representatives from the various municipalities for their informative presentations and they had enjoyed learning about the various factors that would mitigate the energy crisis.

Committee Matters
The Chairperson asked the Committee for resolutions on the municipal presentations.

Mr Marais was excused as he had to attend a Western Cape Provincial Powers Bill meeting.

Ms Murray asked for the Committee to meet in future and have a session on green hydrogen. The Committee could invite Wesgro which has done some work on green hydrogen and Saldanha Industrial Development Zone (IDZ) to speak about their readiness and detail the infrastructural challenges they might face. While the municipal presentations were welcomed, the Committee did not get a sense of whether they needed capacitation in terms of infrastructure, supply chain, training, and personnel and perhaps that information could be requested from municipalities.

Ms Nkondlo said she had noted that municipalities had a huge funding model challenge. Some municipalities, like the Drakenstein and Stellenbosch municipalities, seemed to be in control of the situation and were able to work towards the energy resilience programme. However, the same thing could not be said about Langeberg municipality. The Committee needed to invite the Provincial Treasury and Department of Economic Development and Tourism (DEDAT) to brief the Committee on the funding model for the energy resilience programme. While the presentations were welcomed, municipalities had visible funding gaps and resorted to using their capital reserves to finance the energy programme. The matter had to be addressed with the PT and DEDAT. Transactional Advisors were a mechanism provided by the DEDAT and DEDAT drove the energy resilience programme. If transactional advisors were expensive, then a “one-size fits all” approach should be avoided because some municipalities could yield value from having a transactional advisor but other municipalities may not be able to pay for the appointment of transactional advisors. Why was the province not assisting the district municipalities? Based on the information received, the Committee needed to have an urgent important discussion with the PT and DEDAT.

She was worried about the municipal timing challenge and deviation from normal processes. In Standing Committee on Public Accounts (SCOPA) discussions with the Auditor-General South Africa, AGSA flagged the use of the deviation policy because it should not be used to address timing issues. Perhaps the provincial government did not consider time when choosing to provide municipalities with grants. The recurring point was on the timing of the funds received from National Treasury to the provinces and from the province to the municipality. The timing issue needed to be resolved to prevent the delay of projects which subsequently gave rise to the need to roll funds over to the next financial year. The noble act of providing municipalities with grants should not create pressure for municipalities to resort to using the deviation policy to fulfil procurement demands or rolling over the allocated grants.

The Committee should address procurement with National Treasury. A proper market demand study, which detailed what was available in the market should be conducted to assist municipalities in procurement when faced with timing constraints. Municipalities should not be a stop-gap for projects that were launched just because the proper studies had not been conducted; thus leaving the municipalities with the responsibility of addressing the challenges that arose.

SALGA should be involved in solving the municipal challenges. National government had a District Development Model (DDM) and the provincial government had the development agency which should be integrated so that municipal challenges were dealt with speedily to avoid politicising matters that should not be politicised. The Constitution has already made provision to address issues affecting the three spheres of government. Those models provided should be implemented unless there was evidence that they were not working.

Ms D Baartman (DA) said she was concerned about the poor response to calls for bids by public entities across a wide spectrum of services. It seemed as if a growing percentage of private entities were not interested in doing business with government which removed the important “competition” factor which ensured competitive pricing for goods and services.

The Chairperson said the Committee could request local government to present the figures and specialists could assist the municipalities.

Mr van der Westhuizen said the Committee noted the need for municipalities to support customers who were willing to invest in solar installations. Municipalities could publish on their websites a list of approved equipment for rooftop solar installations including pre-approved brands or grid-tie inverters models. The municipality also needed to shift the peak demand for electricity at the end of a load-shedding period. Geysers were not the only appliances that consumed a lot of electricity at the end of load-shedding. People who did not use solar to charge their batteries charged them using the Eskom grid through inverters, which ultimately defeated the whole point of load-shedding because more energy was consumed after load-shedding. The Committee has noted the huge cost and financial implications of having generators. The municipalities had to cover security costs which were capital in nature and the running costs such as diesel and maintenance. The drop in the income of municipalities was due to a decline in electrical sales.

The Committee also noted the challenges faced by municipalities, particularly rural municipalities in procuring and installing generators. As communicated to the Committee, municipalities did not receive bids and had to deviate from the normal supply chain process. That was a huge concern because, in an ideal world, numerous bids would be compared to ensure competitive pricing.

As the chairperson of the environmental committee, Mr van der Westhuizen was concerned at the increase in the number of generators producing noise and air pollution during load-shedding periods. Some generators produced emissions which caused neighbours, especially residential neighbours, to complain and object to the smell of the fumes and noise produced.

Ms Maseko asked when the Committee would consider the highlighted resolutions as the parliamentary programme meant Standing Committees would be dealing with department annual reports in October. Should the resolutions be addressed in the Standing Committee on Local Government, Standing Committee on Infrastructure and SCOPA? In adopting the highlighted resolutions, was the Committee suggesting that they were not doing enough? The Standing Committee on Local Government has gone out to municipalities and it concluded that it had to look at capacity issues within municipalities and meet with the SALGA. The Provincial Treasury, which was in attendance, highlighted the supply chain management challenges and identified that the municipalities had a scarcity of skills and used consultants to do their work. She was concerned that the Ad Hoc Committee resolutions would be the same resolutions taken by the standing committees. What could be done to ensure that the different Provincial Parliament committees did not conduct the same exercise?

The Chairperson said he would consult with the Senior Procedural Officer, Ms Lizette Cloete, and revert to the Committee to ensure that it does not reinvent the wheel in certain aspects of its Committee work when creating a report at the end of its deliberations. He requested that the Committee adopt the minutes at its next Committee meeting on 29 August 2023 with the Minister of Electricity who had requested the meeting to proceed from 09:00 to 10:30.

Ms Maseko said she had raised a resolution in the previous meeting which the Chairperson probably misinterpreted and wanted to clarify her resolution. Could the Committee engage with NT, the Financial and Fiscal Commission (FFC) and the related provincial bodies to establish a grant that would fund municipalities in tackling the country-wide energy crisis since there were budgetary decreases in the equitable share of the Western Cape government? The grant could be a financial solution for municipalities until the energy crisis was permanently resolved.

The Chairperson said the Committee’s next meeting would be on 30 August 2023 and the Overberg municipality would present to the Committee. An invite would be extended to the Cape Winelands district municipality since it was unable to attend the meeting. He thanked the Committee for its robust deliberations on the presentations.

The meeting was adjourned.