- Eskom and City Power, the electricity company owned by the City of Johannesburg, have signed a memorandum of understanding (MOU) with a view to concluding a transaction in which Eskom would eventually sell or transfer the distribution of electricity in the parts of Johannesburg currently supplied by Eskom to City Power.
- City Power holds the Distribution licence to the rest of the City of Johannesburg.
No transaction has been concluded yet, and in terms of the regulations, all affected stakeholders will be part of the decision-making process.
In terms of the MOU, City Power will conduct its own due diligence study on Eskom’s infrastructure and assets in the areas. Among others, the affected areas include parts of Soweto, Sandton, Orange Farm, Ivory Park, Diepsloot and surrounding areas, in which Eskom currently holds the distribution licence.
Tne news comes as the City of Johannesburg’s new mayor, Mr Mpho Moerane earlier this week, signed a two year power purchase agreement (PPA) with Kelvin Power to increase power supply capacity to the city. The plan is to ensure that City Power has a reliable supply of power in the process of migrating some areas in the City of Johannesburg currently supplied by Eskom.
The due diligence study will consider, among others, the state and value of the infrastructure that would eventually be sold to City Power, the outstanding debt owed by customers to Eskom, and other corporate information that will be material to an eventual agreement.
Should an agreement be reached on the discussions, the parties will seek the requisite regulatory approvals and give the affected customers an opportunity to contribute to a settlement in a public participation process. Among the regulators from whom approvals are required are the National Energy Regulator of South Africa (Nersa), National Treasury, and the Department of Mineral Resources and Energy.
Author: Bryan Groenendaal