- The Midvaal Local Municipality (MLM) in South Africa is in the process of procuring the MLM Electricity Distribution PPP for the award of a 20-year PPP electricity concession through a two-part competitive procurement process (RFQ and RFP) in accordance with Municipal and Electricity laws.
Midvaal is one of best run municipalities in the country and is one of 34 municipalities nationwide to receive a clean audit outcome and the only municipality in Gauteng to obtain a clean audit in the local government audit outcomes for the 2022/23 financial year. Their account with Eskom is fully up to date.
The Transaction Advisors are currently updating certain aspects of the feasibility study and the procurement documentation to re-affirm the affordability, risk transfer, value for money, and bankability of the proposed PPP approach.
Objectives
- Maintain the existing net electricity revenue of MLM.
- Shift capital funding risk, revenue risk, and technology risk to the Concessionaire.
- Allow for benefits of Concessionaire efficiency and effectiveness in electricity service provision.
- Improving continuity of supply inter alia through broader bulk purchase options (in order to reduce the impact of load shedding).
- Pursuing the best possible value for money proposition for customers.
Key features of the ppp concession
The MLM Electricity Distribution PPP envisages the following:
- Going Concern – MLM grants the Concessionaire a concession ito it assumes control, possession, use and enjoyment of MLM’s existing electricity distribution undertaking as a going concern (incorporates a 197 transfer as well as a transfer of existing liabilities, rights and obligations).
- Ringfenced SPV – The Concessionaire is to take the form of a ring-fenced special purpose company whose sole purpose is to implement the PPP Concession.
- Licensing – Concessionaire to be licensed by NERSA.
- Stand Alone – The concessionaire will employ its own systems and processes and will establish its own call centre and will not rely on any shared services, assets or other resources of MLM.
- Ancillary business activities – The Concessionaire may only engage in ancillary business activities that are associated with and complimentary to its electricity distribution services and that are approved by MLM.
Project background
- The PPP has been registered as a municipal PPP with National Treasury.
- An assessment in terms of sections 78(1) was undertaken and the necessary decision was taken ito sections 78(2) of the Municipal Systems Act (MSA).
- An assessment together with the associated feasibility study and stakeholder consultations were undertaken ito section 78(3) of the MSA.
- The required feasibility study in terms of section 120(4) of the MFMA and the related consultation processes was undertaken.
- The views and comments of the Provincial Treasury, DMRE, and COGTA were obtained.
- The TVR I approval has been obtained from National Treasury.
- The TVR IIA approval has been obtained from National Treasury.
- MLM Municipal Council approval of the project feasibility study has been obtained.
- MLM Municipal Council approval to proceed with the procurement of the PPP Concession
has been obtained.
Enquiries: elecppp@midvaal.gov.za
Author: Bryan Groenendaal
