The City of Johannesburg (CoJ) has signed a memorandum of understanding (MoU) with State-owned power utility Eskom with a view for City Power to potentially take over electricity supply for 14 areas in Soweto and Sandton.

The affected areas include parts of Soweto, Sandton, Orange Farm, Ivory Park, Diepsloot and surrounding areas, in which Eskom currently holds the distribution licence.

City Power will conduct a due diligence study on Eskom’s infrastructure and assets in the affected areas. 

The due diligence study will consider, besides 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, the National Treasury and the Department of Mineral Resources and Energy," notes Eskom.

“The signing of the MoU is a great start towards implementing a long-term solution to power supply challenges in the City,” says mayor Mpho Moerane.

“City Power and Eskom will explore, in detail, how the takeover from the national utility by our municipal entity can be best executed. Once these plans are finalised and agreed upon by all parties, we will update Johannesburg residents on progress and timelines,” he adds.

This forms part of the CoJ's efforts to improve reliability of power supply for Johannesburg communities.

An alternative energy mix of gas and solar is also being explored for the same objective, Moerane says.

Earlier this week, the CoJ had renewed a power purchase agreement with privately owned Kelvin Power Station. The power station will also supply the city with an additional 100 MW of electricity.