By: ESI Africa

This comes after the Minister of Electricity and Energy, Dr Kgosientsho David Ramokgopa, issued a Section 34 Ministerial Determination.

This Section 34 Ministerial Determination is a crucial mechanism that empowers municipalities to procure new generation capacity to meet specific energy needs and enhance energy security, according to the South African government.

This generation programme will allow eThekwini Municipality to procure 400MW of new generation capacity (100MW solar PV and 300MW gas-to-power [GTP]), with a focus on dispatchable, reliable and low-carbon energy technologies.

The minister emphasised that the construction of this gas-to-power and the 100MW of solar PV does not have to be funded off the Metro’s balance sheet.

“It will be an off-balance sheet transaction. So it’s not going to burden their balance sheet because once they enter into bilateral agreements with the off-takers, they are able to use that paper to raise money in the debt capital market to finance this project as special purpose vehicles that are going to ensure that electricity is provided to the municipality.”

Municipalities must follow eThekwini municipality’s lead to not lose consumers

Ramokgopa warned that if South African municipalities don’t move with the pace of eThekwini Metro, they are going to find that in the next five years, their best consumers will have disappeared. “They will be provided [for] by the private sector. They are going to sit with those who cannot afford it, and that is the recipe for collapsing municipalities from a revenue point of view.”

The Mayor of eThekwini, Councillor Vusumuzi Cyril Xaba, said this Determination marks a critical milestone in the Metro’s energy strategic roadmap, which seeks to enhance energy security by diversifying energy sources and reducing reliance on the national grid.

“We are not only celebrating the decision by the Minister of Electricity and Energy to authorise the city to develop new electricity generation capacity, but we are also affirming our commitment to lead South Africa’s energy transition in a way that is secure, inclusive, and sustainable.

 “We are excited that we are the first metro in the country to receive this determination from the minister to procure new electricity generation capacity directly from Independent Power Producers (IPPs). This is a precedent-setting moment that reinforces the constitutional role of municipalities in ensuring they deliver quality services.”

Xaba said their energy strategy is embedded in their Integrated Development Plan (IDP), which is a legislated planning and performance management instrument. 

“The inclusion of our energy mix in the IDP ensures that our power procurement is directly tied to broader development outcomes, job creation, economic growth, climate change and spatial transformation,” said Xaba.

Xaba called the programme catalytic, as it’s projected to unlock R8.5 billion in private investment, boosting regional industrial activity.

“Most importantly, it will create an estimated 2,200 jobs during construction and operation phases. This initiative will also empower small businesses and promote inclusive enterprise and supplier development. Therefore, this is not an abstract policy document; it is a tangible plan that will bring meaningful change to our communities.”