The Mafube Local Municipality’s lack of support for Rural Maintenance may jeopardise the ongoing dispute between Rural Maintenance and Eskom over the former’s mitigation of load shedding in the town of Frankfort. Rural Maintenance manages Mafube’s electricity distribution function under a 25-year contract that is still 14 years in the making. In the Free State, Mafube includes the towns of Frankfort, Villiers, Tweeling, and Cornelia.
The dispute revolves around Rural Maintenance’s use of excess energy generated by four solar farms in the area to avoid load shedding for Frankfort residents when the supply from solar exceeds the amount that must be shed. Eskom claims that alternative energy used as part of users’ normal load profiles is already included in the baseline from which the load-shedding reduction must be achieved.
In court papers, the utility expressed concern that if Rural Maintenance is allowed to continue with its practice, which it calls “voiding,” a large number of its customers will want to do the same, “and Eskom’s ability to effectively manage the grid will thus be severely compromised.” However, the outcome of the dispute is seen as critical for many communities in the process of developing similar projects.
According to Tommy Garner, chair of the South African Independent Power Producers Association (Saippa), hundreds of projects across the country are aimed at accomplishing the same thing as Rural Maintenance. To be financially viable, such projects must sell energy, which will be impossible if only used during load shedding.
Rural Maintenance’s court application to retain control over how load shedding is implemented in Mafube was denied because the municipality failed to file an affidavit confirming its support for the company. Rural Maintenance, as an agent of the municipality, lacks legal standing to litigate if it is unable to demonstrate support from the municipality, which is the entity licenced to distribute electricity in the area.
Rural Maintenance CEO Chris Bosch believes the same thing will happen if the dispute is brought before NERSA. “If Eskom points to the municipality’s position again, which I’m sure it will, we won’t be able to move forward with the dispute.”
Advocate Mothusi Lepheane, acting municipal manager in Mafube, says his hands are tied. The struggling municipality is in administration, and the administrator has referred the contract between the municipality and Mafube for review to the National Treasury. “Municipalities are not allowed to have such long contracts unless they are reviewed every three years,” Lepheane explains.
According to Lepheane, he is unable to enter into any contract-related negotiations on behalf of the municipality until the review is completed. This, according to Bosch, is just a smokescreen. “The municipality began making noises about wanting to get out of the contract three years ago,” he says. The required review is, in fact, a performance review, not a reconsideration of the agreement’s continuation.
“Who would enter into a contract and invest millions of rands if it could be terminated after three years?” Rural Maintenance, according to Bosch, has invested R120 million in Mafube to replace virtually all of the electricity distribution infrastructure. The contract is written in such a way that the company will recoup its investment over a period of 25 years.
Mafube, in fact, does not pay Rural Maintenance for the electricity it consumes; the company owes the company millions of dollars. When the municipality is excluded, the company has a 100% collection rate, and Eskom receives its full payment for bulk purchases every month, except for the portion used by the municipality. The norm set by the National Treasury is 95%. Only 60% of consumers in the city of Tshwane, for example, pay their current accounts on time.
