Western Cape Municipalities: Energy Infrastructure Plans for 2023/24

Meeting report

The Chairperson invited representatives of the different municipalities to introduce themselves.

Mr G Pretorius (DA) said he had been informed by the Mayor of Prince Albert that loadshedding was underway in his area and that he was busy with arrangements to set up a generator to join the meeting.

Ms Cloete advised that the representatives of the Beaufort-West Municipality had indicated that their presentation would be received shortly.

Central Karoo District Municipality (CKDM) Presentation  
Mr Mzingisi Nkungwana, Acting Municipal Manager, reported on the R350 000 grant that the municipality had received from the Provincial Treasury to purchase a roaming generator. All tenders received exceeded the allocated amount and the municipality subsequently applied for the funding to be rolled over. The municipality was exploring alternative energy solutions to move the entire Central Karoo District off the ESKOM Grid.

(See Presentation)

Discussion
Mr C Dugmore (ANC) asked how much financial support the municipality had been receiving from the Provincial Government to provide energy security.

Mr F Christians (ACDP) asked if the municipality had requested more assistance considering the funds were not sufficient to buy what was required. He sought clarity about whether the municipality was not using electricity from the ESKOM Grid but from solar panels.

Ms D Baartman (DA) said the proposal to go off the grid was ambitious. She wanted to know how much money had been allocated in the budget for this purpose. She drew attention to solar panels that had been installed and subsequently stolen in Nelspoort. She asked how the municipality would be safeguarding the solar panels.

Ms N Nkondlo (ANC) asked if the Provincial Treasury was present in the meeting.

The Chairperson replied that they had not been invited to the meeting.

Ms Nkondlo wanted to understand whether the R350 000 grant received for the energy needs of the municipality was a standard figure or if it represented a proportional allocation of the grant. From previous presentations, she noted that other municipalities had received almost R1 million. She asked what the average market price was to secure the generators that were required.

Mr P Marais (FF+) asked if the R350 000 grant was in response to a request from the municipality or if the amount was thumb sucked without a discussion about the needs of the municipality.

Mr Nkungwana said the R350 000 was intended for the purchase of a roaming generator. But the bids were unresponsive and therefore a rollover had been requested. Although the municipality had indicated that about R900 000 was needed, it nevertheless welcomed the gesture by the Provincial Government. The municipality would appropriate from its budget to provide security for safeguarding the solar panels to prevent what had happened in Nelspoort. The municipality did not have the R2.6 million allocated to procure solar panels and was depending on National Treasury and Provincial Treasury for support.

Mr Ralph Links, Director: Strategic Services and Corporate Support, CKDM, stated that the R350 000 was allocated with the understanding to procure a roaming energy generator. The municipality submitted its requirements but did not receive what was requested. Numerous discussions were held about the shortage of funding for the entire district but no actions had yet taken place. Teams of engineers had been working on different submissions to arrive at the allocated amount and the process that needed to unfold. Although the municipality accepted the gesture, it was impossible to go to the market and unable to even conclude the tender process.

Mr Wesley Strong, Manager: Road Infrastructure Services, CKDM, said a number of businesses in Beaufort-West were following the solar panel route. He was satisfied that the protection provided by the armed response would prevent the theft of solar panels. The allocated amounts had been questioned in discussions with Provincial Treasury. The municipality was informed about a formula that is applied to calculate the amounts. The municipality had requested co-founding from the Department of Infrastructure but the request was denied. The nine tenders received were all above R440 000.

Mr Marais wanted to know what percentage of the energy capacity the municipality was able to utilise. He asked if the costs of solar panels were worth the percentage of energy that is being generated.

Ms Baartman asked if the solar panel proposal was planned for municipal buildings. She drew attention to the negative audit outcomes of the municipality and sought confirmation that internal controls were in place to ensure that money was spent for the intended purpose and that irregular expenditure would not be repeated in the future.

Ms Nkondlo asked if Local Government had been invited to the meeting.

The Chairperson replied that Local Government was present in the first meeting but had not been invited to this meeting.

Mr Dugmore said it was unacceptable that Local Government was not present when issues of local government were being discussed. He proposed that an official be called to attend the meeting. He suggested that the underfunding of the Central Karoo municipalities appeared to be deliberate and that the Committee was not going to get answers when Local Government was absent.

The Chairperson agreed to invite Local Government officials to the next meeting scheduled for 27 September 2023 and to ask for an explanation about the underfunding of the Central Karoo as well as the formula that is being used for the funding allocations.

Ms Nkondlo said it should have been standard procedure to have Provincial Treasury and Local Government present when dealing with a special dispensation to ensure that funding is equitably distributed. Without their presence, the Committee was unable to verify the information from the municipalities and conduct oversight of the energy crisis. She asked if the municipality had received acknowledgment of the request for the rollover of funds. She requested an update on the shale gas project in the Central Karoo. The project would assist the entire country in diversifying the energy mix.

Mr A Van der Westhuizen (DA) drew attention to other municipalities who had augmented the purchase of generators from their own funding in cases where the allocated money was insufficient. He noted that the shortfall was about R90 000 and wanted to know what prohibited the municipality from proceeding with procurement by using, for example, the salaries of two officials to cover the R90 000.

Ms Nkondlo asked if Mr Van der Westhuizen was suggesting that the salaries of officials should be used to augment the costs of the generator.

Mr Nkungwana, found Ms Baartman’s comments worrying and replied that the Central Karoo Municipality did not receive any adverse audit findings or disclaimer for the past three years. He was concerned that the calculations might have been based on the wrong perception of a negative audit outcome, which was not the case. The problem would remain unresolved, even if the rollover is granted. Provincial Government did not appreciate the challenges of the district to respond to the energy crisis. In the short-term, municipal buildings would benefit from solar panels but the medium- to long-term plans are meant to move the entire community off the grid.

Mr Links, stated that the municipality did provide for the shortfall of R100 000 in the adjustment budget but had to wait for the completion of the rollover process. He was not optimistic that the rollover would be approved if it was based on the wrong perception that there were no controls in place. A matrix for engagement with stakeholders has been developed to discuss the commercial viability of shale gas exploration. It was decided to conduct the public participation process before the bidding process. The priority project includes a shale gas component. This had been discussed with Provincial Government and would further be showcased at the Economic Development Summit in November 2023. The studies, conducted in cooperation with the Council for Geoscience and the Petroleum Agency South Africa had been completed. The Minister has to lift the moratorium for the process to unfold.

Mr Strong said Beaufort-West has sunlight for most of the year, with the exception of two weeks. The system would therefore be fully utilised and would be enough to get off the grid. Energy produced over weekends would be for sale to recover the costs.

Mr Nkungwana said the District Municipality was trying its best to support the category B Municipalities in terms of financial management. A service delivery support package had recently been signed for Beaufort-West to make the municipality functional. The same is being done for other municipalities. The assistance of Provincial Treasury and COGTA should be at the centre of assisting the District Municipality to support the category B Municipalities.

Mr Van der Westhuizen asked to what extent the municipality was able to avoid the risk of a rollover. Some municipalities are finding creative ways within the law to achieve what others are unable to achieve. He asked why the municipality did not apply for additional funding instead of following the rollover route.

Mr Marais was interested in the use of shale gas which had to date been prevented due to environmental concerns. He enquired about the involvement of the municipality and the engagement with stakeholders. He wanted to know if the Department of Environmental Affairs and the National Minister are involved in the process.

Ms Nkondlo said an engagement with Provincial Treasury was needed to discuss the augmentation of funds because they would have funded the studies related to the average market rate and the cost estimates of the support required. She wanted to understand the cost-benefit analysis and cost estimates to enable municipalities to meet current and future energy demands for the security of their communities.

Mr Dugmore said he was reading in the media about private sector development and became aware of the solar farm in Beaufort-West that was being funded by the private sector. He asked for clarification about private sector investment and if municipalities were exploring public-private partnerships to procure some of the energy from existing wind farms.

Mr Nkungwana replied that municipalities have been exploring various initiatives to respond to the energy crisis, including inviting private sector role players. The intention is to move completely off the grid. In terms of the ESKOM formula, the municipality could be spared from the loadshedding schedule if it reduces consumption. He explained that R100 000 was appropriated from the adjustment budget to augment the R90 000 shortage. The allocation was received in quarter four, which created planning problems and added to the difficulty of finding responsive bids. He replied to Mr Marais about the environmental concerns about shale gas. The Committee spent two months identifying stakeholders to ensure that communities are represented in the public participation process. It is the responsibility of other stakeholders to engage the relevant government departments. A tier system was used to categorise stakeholders. The municipality is committed to following a thorough process up until the licenses are issued. The project would be rolled out in phases based on the financial viability thereof. He undertook to share the programme with the Committee.

Laingsburg Municipality Presentation 
Mr John Komanisi, Technical Director, stated that the municipality had received R60 000 for the procurement of a 20kVA generator. The municipality was unable to find a generator under R130 000. The municipality has submitted a top-up funding request and is awaiting confirmation based on a tentative agreement with the Department. He proposed a review of the South African model of municipal functions and mandates considering the impact of the energy crisis on the municipal environment. The energy crisis should be used to reconfigure municipalities.

(See Presentation)

Discussion
Mr Marais expressed sadness about the hopelessness that emanated from the presentations. The situation was caused by the centralisation of government. He suggested that the funding model and the mandates of all municipalities should be reviewed.

Ms Baartman asked if the municipality had engaged the Roggeveld Wind Farm project which might be producing more energy than what they need. The Laingsburg Municipality should find out about the pricing and energy availability. Local municipalities could make a proposal to the Central Karoo District Municipality in terms of the energy that could be generated.

Ms Nkondlo enquired about the engagement with Provincial Treasury on the different funding models which had been changed significantly since Covid-19. She assumed that municipalities would be engaged in the budget process because the allocated money had been insufficient. She asked what the municipalities would do should additional funds be allocated.

Mr Christians asked if the municipality had communicated with Provincial Government that the money was insufficient. He wanted to know what further plans had been developed to mitigate loadshedding at the municipal level. He was concerned about the effect of loadshedding on businesses in the area.

Mr Jafta Booysen, Municipal Manager, LM, replied that he had written a letter to the Department of Local Government requesting that the allocated R60 000 not be gazetted. But his request was ignored and the allocation was gazetted as a conditional grant for the purchase of the prescribed 20kVA generator. The funds must now be rolled over. The municipality had a commitment for a top-up but it was not in writing. The funding model has been discussed on various platforms. Being the smallest municipality, Laingsburg will always receive the least amount of funding but needs should not be compared to the size of a municipality. He proposed that a handicap system, similar to what is being used in golf, be considered which would allow for the proportional allocation of the money from government.

Mr Komanisi replied to Ms Baartman that in terms of Independent Power Producers (IPP) contracts, ESKOM is allowed to switch off the turbines when additional energy is produced. The matter is being discussed on all platforms and in engagements with National Treasury. Laingsburg has a low-income tax base and is mostly grant-dependent. The municipality is struggling to generate its own revenue. Legally, professionals such as town planners, engineers, and chief financial officers should be appointed but these positions remain vacant due to a lack of funding. Early on in the financial year, the municipality received communication from the Department of Local Government about the specific energy needs. The municipality had indicated that it would need R740 000 for critical infrastructure but was allocated only R60 000. The municipality is planning to fund its own capacity because it can no longer rely on the government to end loadshedding. He was hoping that the Department of Mineral Resources and Energy (DMRE) would change the social funding rules in terms of IPP. One turbine produces 5MW energy whereas Laingsburg needs less than 2MW. He found it problematic that the wind farm company did not want to engage the municipality on this matter but instead, it has been supporting the community directly. It would be more beneficial for the community to get energy from the turbine because it would result in long-term savings.

Ms Baartman remarked that as a member of the technical committee of the wind farm company, Mr Komanisi was in the position to engage the company on the use of their social funds. She asked if the municipality had communicated with the DMRE for assistance and explained how much it would cost to take one ward or part of a ward off the grid to avert one stage of loadshedding.

Mr Komanisi confirmed that he was part of the Social and Economic Development Engagement Group of the wind farm company. His role is to ensure that the community receives a fair hearing but it does not involve changing the rules of social funding. The municipality had submitted a business plan to fix the landfill site. The builder of the wind farm engaged the DMRE. The municipality was still waiting on the TLB. A deviation was received to investigate the TLB. The Department of Health received equipment worth R2 million from the wind farm company. He pointed out the disparity, i.e. government departments are receiving support but the municipalities are not offered the same backing. The costs to purchase the Gloversville part of the grid from ESKOM have been investigated. The wheeling of energy onto the grid was causing loadshedding. The solution for the municipality is to have generating capacity within its own grid.

Prince Albert Municipality Presentation 
Mr Zolile Nongene, Director: Technical Services, reported that the municipality received R175 000 to fund the procurement of a standby generator to ensure power supply to critical infrastructure installations. The municipality was forced to re-advertise the bid because the money was insufficient. The Department of Local Government has been considering a Containerised Battery Storage project for the municipality. The project would assist in reducing loadshedding up to four hours per day and eliminate the dependence on the ESKOM Grid. The municipality was waiting for confirmation for the implementation of the project in the Prince Albert area.

(See Presentation)

Discussion
Ms Baartman enquired about the estimated costs for the Containerised Battery Storage project which is aimed at reducing loadshedding.

Mr Nongene replied that the municipality was also seeking an answer to Ms Baartman’s question. The question had been asked from the Provincial Government and he was hoping that the Committee would support the municipality in this regard. The councillors estimated that it would cost R1.6 million to get the project rolling, R500 000 for the assessment of the network, and R600 000 for fencing.

The Chairperson said the Committee would support the municipality as far as possible.

Ms Baartman proposed that Provincial Government should submit a detailed costing report.

Beaufort-West Municipality Presentation 
Mr Christoper Wright, Acting Director: Infrastructure Services, stated that the municipality had received R1 115 000 for the purpose of equipping two clean water pumpstations with generators in Merweville and Murraysburg. The municipality co-funded the project to the value of R142 870. The project was successfully completed in June 2023.

(See Presentation)

Discussion
Mr Mitchell drew attention to concerns about the borehole infrastructure and the distribution of water in Merweville. He asked if the additional capacity, that was added through the installation of solar panels, had been taken into account prior to investing more money in energy infrastructure in Merweville.

Mr Wright replied that prior to this project, Beaufort-West did have problems with water supply in Merweville because of the existing borehole infrastructure not being able to reduce supply when the water levels recede. The Department of Local Government made funding of R5 million available to change all the existing borehole infrastructure. With the new technology, the municipality is able to constantly monitor the water flow. Subsequently, the existing reservoir was upgraded and a new reservoir was built in Merweville. 95% of Merweville had been equipped with new water meters. The new pipeline is transferring water from the boreholes to the reservoirs.

Mr Mitchell welcomed the feedback and was pleased that money was not being spent on existing infrastructure that would not be able to manage the waterflow. He had a similar question about the infrastructure in Murraysburg and wanted to know if the same process as in Merweville had been followed.

Mr Wright replied that the same process was followed in Murraysburg. All existing boreholes were upgraded and two new boreholes were equipped with a new pipeline running to the newly built reservoirs. There are still some infrastructure challenges in Murraysburg related to the old reservoir and the lack of water meter installations. The municipality received funding from Provincial Treasury. Merweville was the pilot project for the installation of water meters. The same project had been rolled out to Nelspoort, where it was near completion. The installation of new prepaid meters would follow in Murraysburg.

Actions and resolutions
The Chairperson remarked that Local Government and Provincial Treasury would be invited to the next meeting as proposed by Ms Nkondlo.

Ms Baartman proposed that Mr Komanisi be requested to forward the costing report related to the purchase of the Gloversville part of the ESKOM Grid. The Prince Albert Municipality asked for assistance from the Committee to obtain information on the costs of the container battery storage project. She proposed that the Committee request assistance from the DMRE on the generating capacity on wind and solar farms.

Mr G Brinkhuis (Al Jama-Ah) proposed an oversight visit to the Koeberg Power Station to get a better understanding of when the plant would be returning to 100% capacity.

Mr Christians asked that Members consider how to deal with money being allocated but not spent because it is insufficient. For example, the R60 000 allocation for the Laingsburg Municipality was gazetted even though the municipality had indicated that it was not enough.

Ms Baartman proposed that Local Government and Provincial Treasury be requested to report on their engagements with municipalities in determining how the money is being allocated. The formula should be made known to the Committee. The money was made available from the Provincial Revenue Fund to mitigate the impact of loadshedding.

The Chairperson announced that the next meeting is scheduled for 27 September 2023 with the Garden Route municipalities. He updated the Committee on the engagement with the Minister of Electricity. A provisional date for early November had been agreed but not yet confirmed. The Chief Whip would communicate the date within the next day or two once confirmed. He was satisfied that the Minister was serious and sincere in his statements about meeting with the Committee and it would therefore not be necessary to follow the route of summonsing him. The date for the NERSA briefing will be confirmed once the date is agreed. Ms Cloete would be requested to secure a date for a follow-up meeting. A meeting would also be scheduled to adopt the Committee Reports.

The meeting was adjourned.