Kumaran Nair writes:

The solar power project that is being planned and organised for implementation under the political supervision of the Executive Mayor, the MMC for Infrastructure, the Municipal Manager, Chief Financial Officer, and the Senior Manager for Infrastructure, is engulfed and strangled by significant budget, financial, and operational risks.

The residents of Potchefstroom, Mohadin, Promosa, and Ikageng must adopt a pre-emptive and proactive approach and mindset in their response to the Private Power Project and Agreement that relates to the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS) to be developed within the municipal boundary of the JB Marks Local Municipality. 

The notice from the Municipal Manager that is requesting comments regarding the proposed signing of a 25-year Private Power Agreement with a possible Private Power Producer, without complete compliance with the requirements of Section 33 of the MFMA.

The Municipal Manager has confirmed that this solar power plant will supply renewable electricity into the municipal network to improve stability, reliability, and security of power to the residents, businesses, and public facilities.

The Executive Mayor, the MMC for Infrastructure, the MMC for Finance, the Municipal Manager, Chief Financial Officer, and Senior Manager for Infrastructure provide their empirical evidence that the current bulk supply of electricity from Eskom does not provide any form of stability, reliability, and security to the residents and businesses within Potchefstroom, Ikageng, Mohadin, and Promosa.  

It is the intuition that the only reason is that the accumulated arrears and current account debt that is owed to Eskom have become so uncontrollable and are projected to be approximately R 711, 7 million by the 30th June 2026, that the Executive Mayor and his team are running with urgency to sign a contract with their private producer for the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).     

The Municipal Manager confirms that the JB Marks Local Municipality will purchase electricity at an agreed-upon tariff, escalated annually, and will assume obligations under the 25-year private power agreement with the selected Private Power Producer.

In terms of the provisions of Section 33 of the MFMA, the Executive Mayor, the MMC for Finance, the MMC for Infrastructure, the Municipal Manager, Chief Financial Officer, and Senior Manager for Infrastructure, must provide replies to the following matters and questions, namely:

1. The Municipal Council Resolution that was adopted by the J B Marks Municipal Council, which grants management authority in terms of Section 33 of the Municipal Finance Management Act no 56 of 2003 to the Municipal Manager to sign the Private Power Agreement with the secretly selected Private Power Producer for the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).
2. The Municipal Manager is requested to provide the documentation that was initially sent to the National Treasury, the National Department of Cooperative Governance, the North West Provincial Treasury, the North West Department of Cooperative Governance and Traditional Affairs, with the request for their comments on the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).
3. What is the content of the written comments from the National Treasury and the other aforementioned National and Provincial Organs of State with regard to signing the Private Power Agreement for the construction of the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS)?
4. The Municipal Manager is requested to provide the projected Municipal Budget and Financial obligations that were adopted by the J B Marks Municipal Council for each of the years that are authorized and covered by the Private Power Agreement for the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).
5. What is the municipal debt impact on the municipal budget and financial obligations in relation to current, medium, and long-term municipal tariff and municipal own revenue for the J B Marks Local Municipality?
6. To provide the Municipal Council Resolution wherein the J B Marks LM will acquire the significant capital investment or will derive a significant financial and economic or financial benefit from the contract for the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).    
7. To provide the Municipal Council Resolution wherein the J B Marks Municipal Council has approved the entire contract as it is to be implemented.  

The Executive Mayor, the MMC for Finance, the MMC for Infrastructure, the Municipal Manager, Chief Financial Officer, and the Senior Manager for Infrastructure, who must be required to provide replies to the matter and questions, namely:

1. What is the total project CAPEX, and how was it benchmarked against market norms and standards for similar projects?
2. What are the names of the financial institutions that are funding the project?
3. What represents a bankable financial model that has been verified by Independent Management, Engineering, and Solar Power Plant Consultants?
4. Who is the off-taker of the electricity under the Power Purchase Agreement?
5. What is the tariff (R/kWh) that has been agreed, and what are the timeframes and or duration?
6. What is the Electricity Grid Capacity allocation that has been approved and secured from Eskom, with the quotation that outlines the municipal budgetary and financial obligations by the J B Marks Local Municipality?
7. Is the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS) been licensed or registered with NERSA?
8. Did the National Department of Environmental Affairs and or its delegated Agency approve and issue the Environmental Impact Assessment Authorisation, including where and what is the content of the EIA Report?
9. Who amongst the aforementioned political and management decision makers will hold accountability and custodianship for the Capital and Recurrent Cost overruns and or delays?
10. The confirmation from the aforementioned political and management decision makers as to whether the J B Marks Local Municipality will serve as collateral for the budgetary, financial, and loan obligations for the construction of the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS).

The Specific Research Information

The analytical study and review for the construction of the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS) in South Africa provides the following vital information that will empower the residents of Potchefstroom, Ikageng, Promosa, and Mohadin, namely:  

The planned and organized construction of the 130 MW Solar Photovoltaic (PV) power plant and the 30 MWh Battery Energy Storage System (BESS) within the municipal boundary of the J B Marks Local Municipality is engulfed and strangled by non-compliance with applicable legal and regulatory requirements i.e. the prerequisite requirements of section 33 of the MFMA, no bankability status, and no confirmed financial agreement with a F1 Financial Institution. In addition, the Executive Mayor, MMC for Finance, MMC for Infrastructure, the Municipal Manager, Chief Financial Officer, and Senior Manager for Infrastructure have absolutely no signed Municipal Council Resolution that was adopted by the JB Marks Municipal Council before the commencement of any procedure and process for this proposed solar power project.   

Note: The views and opinions expressed in this reader’s letter are those of the author and do not necessarily reflect the views, policies or position of the Potchefstroom Herald, its editorial staff or publishers.