A public participation notice from the JB Marks Municipality regarding a proposed 25-year Power Purchase Agreement (PPA) with a private electricity generation company has raised eyebrows among JB Marks councillors.

Although it is believed that the agreement could reduce long-term debt owed to Eskom and move the area toward solar energy, questions are being asked due to the proposed agreement having not been yet discussed in a council meeting as per section 33(1a) of the Municipal Finance Management Act (MFMA).

According to the notice, “the project includes a 130 MW Solar Photovoltaic (PV) power plant and a 30 MWh Battery Energy Storage System (BESS).”

The goal of the project is to supply renewable electricity into the municipal network to improve the stability, reliability, and security of power for local residents, businesses, and public facilities.

Although the notice was published at the end of February, it went largely unnoticed until the start of May, when councillors questioned whether the correct legal procedures had been followed.

According to the JB Marks Municipality, this notice is issued in accordance with section 33 of the Municipal Finance Management Act (MFMA), which deals with contracts that have financial implications for future years.

Summarised, section 33 of the MFMA states that the draft contract must be made public and provide an opportunity for public comment. The views and recommendations of the provincial and National Treasury must also be taken into account.

The DA caucus leader in the JB Marks Municipality, Hans-Jurie Moolman, has stated his growing concerns, about the process followed in terms of transparency.

“We are not opposed to cheaper and reliable alternative energy, but oversight requires that the municipality operates transparently. We do not have an idea what the contents of this contract entail. There is also concern regarding the number of contracts approved in the past where project goals were not achieved. There must be due diligence on the company if a contract of this length and scope is entered into,” added Moolman.

Moolman also raised several unanswered questions, including whether the contract followed a competitive, supply chain-compliant bidding process, and whether the supplier holds the necessary licence from the National Energy Regulator of South Africa (NERSA).

Freedom Front Plus caucus leader in the JB Marks Municipality, Matthys van Tonder, also agreed that moving towards solar power is a positive initiative.

He also added that this proposed agreement must be brought before council. He also added that the length of the proposed agreement is concerning.

“This is a lot of money that will be invested in a 25-year project. This is the scope of five political terms and it is difficult to tie people to a payment agreement of this length. We will need to get more details on this agreement,” he emphasised.

The public and any interested parties are invited to submit their written comments or representations on or before the closing date of May 29. Submissions can be delivered in person to the JB Marks Municipality (35 Wolmarans Street) or sent via email to mmsecretary@jbmarks.gov.za.

What does the MFMA Section 33 say:

According to section 33 of the Municipal Finance Management Act No. 56 of 2003 in accordance with Section 21A of the Municipal Systems Act – Communications to local community:

33 (1) “A municipality may enter into a contract which will impose financial obligations on the municipality beyond a financial year, but if the contract will impose financial obligations on the municipality beyond the three years covered in the annual budget for that financial year, it may do so only if-

(a) the municipal manager, at least 60 days before the meeting of the municipal council at which the contract is to be approved.

(i) has, in accordance with section 21A of the Municipal Systems Act

(aa) made public the draft contract and an information statement summarising the municipality’s obligations in terms of the proposed contract; and

 (bb) invited the local community and other interested persons to submit to the municipality, comments or representations in respect of the
proposed contract; and

 (ii) has solicited the views and recommendations of-

 (aa) the National Treasury and the relevant provincial treasury;

 (bb) the national department responsible for local government: and

(cc) if the contract involves the provision of water, sanitation, electricity, or any other service as may be prescribed, the responsible national department;

 (b) The municipal council has taken into account-

 (i) the municipality’s projected financial obligations in terms of the proposed contract for each financial year covered by the contract;

(ii) the impact of those financial obligations on the municipality’s future municipal tariffs and revenue; 

(iii) any comments or representations on the proposed contract received from the local community and other interested persons; and

(iv) any written views and recommendations on the proposed contract by the National Treasury, the relevant provincial treasury, the national department responsible for local government, and any national department referred to in paragraph (a)(ii)(cc); and

(c) The municipal council has adopted a resolution in which –

(i) it determines that the municipality will secure a significant capital investment or will derive a significant financial, economic, or financial benefit from the contract;

(ii) it approves the entire contract exactly as it is to be executed; and it authorises the municipal manager to sign the contract on behalf of the municipality.