The City of Tshwane is poised to establish a municipal parastatal tasked with supplying electricity to customers in line with the 2006 Cabinet decision mandating municipalities to establish regional energy distributors and separate their electricity operation.
Utility Services MMC France Boshielo emphasised the need for reforms to establish a sustainable, profit-oriented electricity business unit.
He was speaking during a recent council meeting where he tabled a report regarding the energy and electricity department turnaround strategy and plan, which was unanimously approved.
He said the reforms are in keeping with the National Treasury guidelines, which include creating a ring-fenced financial operational system within the electricity trade and services and establishing accountable revenue channel.
According to him, the reforms “will allow Tshwane to meet its energy needs, energy transition and adapt to the decentralisation trends in modern energy markets”.
“By establishing a ring-fenced electricity trading service Tshwane will achieve greater financial transparency, attract investor confidence and reduce reliance on subsidies from other municipal services,” he said.
The reforms, he said, also emphasise the needs to reduce electricity losses which currently cost the city over R2 billion annually.
Boshielo said the transitional launch of Tshwane energy and electricity ring-fenced business unit will be in June 2025.
The report noted that the development and implementation of a turnaround strategy for electricity trading services in the city will have significant enhancements for customer services.
“It is noted that stakeholder meetings with internal departments, including customer relations management department will take place from October 2024 to 30 March 2025 to ring-fence support functions, including customer care services, with the trading service reforms,” the report said.
Former Mayor Cilliers Brink, cautioned against replicating City of Joburg's model, citing concerns about costly entities and lack of control.
He mentioned that entities such as Johannesburg Water and City Power have boards that cost huge amounts of money and that entities don’t have full control over all aspects of the value chain.
“For instance, Johannesburg Water and Joburg City Power are not responsible for collecting the revenue. They just become cash cows for people to give patronage positions to their friends and comrades,” he said.
In contrast EFF councillor Moafrika Mabogwana advocated for adopting Joburg's model, saying: “We want to differ with the former mayor because the model of Johannesburg he is suggesting is working very well.”
He said the advantages of a state-owned entity include enabling the City of Joburg to conduct business with any organ of state “and as a result that will bring more revenue into the city”.
“For proper commercialisation, effectiveness and efficiency of the department of electricity we should adopt that model of ensuring that we convert or structure the department into an entity,” he said.
Pretoria News