Greater Tzaneen Medium Term Revenue and Expenditure Framework (MTREF) Electricity Programme
The case study below demonstrates actual outcomes of the electrification projects identified in the Infrastructure Master Plan developed in 2013/14.
Electricity is essential for modern activities and is a necessary input for supporting economic activity and several public services. Electricity provides for efficient lighting, information and communication technologies and productive organisation of manufacturing. Accordingly, the South African government has prioritised access to electricity to foster economic growth and development. According to Statistics South Africa, nearly 85% of South African households had access to electricity in 2019. The provision of electricity involves three key functions: generation, transmission and distribution. In South Africa, Eskom owns the majority of generating and transmission capacity. It also distributes electricity to some industrial clients, businesses and households. At a local level, municipalities are the main suppliers of electricity to households and businesses. The distribution networks of municipalities and Eskom often overlap as is the case with Greater Tzaneen Local Municipality (GTLM).
Scope of work
The GTLM holds the distribution licence for Tzaneen and Haenertsburg as well as the townships of Gravelotte and Letsitele, distributing electricity to an area of approximately 3 500 square kilometres. A 2014 National Energy Regulator of South Africa (NERSA) audit to assess compliance with the conditions of its energy licence revealed that a significant portion of the distribution network (e.g., overhead power lines) was not functioning optimally and needed to be replaced. The audit also revealed that most of the infrastructure was older than 50 years and had become financially unfeasible to maintain and repair to provide a reliable and satisfactory service.
The relatively high distribution losses were negatively impacting the GTLM finances, as electricity revenue accounts for more than half its discretionary revenue. Furthermore, the poor network resulted in incorrect billing and metering. Some meters malfunctioned giving incorrect readings at the point of consumption with several consumers contesting their accounts.
The GTLM approached the DBSA for a loan to fund the refurbishment/replacement of a section of the electricity distribution infrastructure over three years between 2017/18 and 2019/20. The funding was sought for, among others, the upgrading and refurbishment of local substations, distribution lines and associated infrastructure such as switchgears and retrofitting of panels. There were more than 20 projects that were funded as part of the MTREF Programme.
The DBSA approved a R90 million loan together with a R10 million Infrastructure Investment Programme for South Africa (IIPSA) grant for the project. The projects were implemented as per the municipality’s 2014 Masterplan and the Integrated Development Plans (IDP) in Tzaneen and Haenertsburg.
The repair and replacement of the electricity distribution infrastructure was expected to lead to a reduction in distribution losses and subsequently contribute to the improvement of the finances of the municipality. Furthermore, additional households will be electrified fostering socio-economic development in and surrounding the municipality. The projects were also expected to provide employment during the construction and operational phases of the programme.
- 3 400 new electricity connections
- 250km length of electricity network constructed/rehabilitated
- Replacement and extension of light poles
- Replacement of steel wires and brittle conductors
- Installation of the auto reclosers on 33kV and 11kV overhead lines as well at substations
- Replacement of substation tripping batteries
- Installation and protection of 2MVA transformers at both Waterbok and Blacknoll
- 60 streetlights installed
- Replacement of conventional fencing with ClearVu fencing
Lessons
Some areas (e.g., Iron Crown) are inaccessible to vehicles and the transformer had to be physically carried. The funding was insufficient to do all the required repairs and/or refurbishments. For instance, only the worst sections of a power line were replaced, but there was insufficient budget to replace the entire line network. Similarly, not all old poles could be replaced. Only the severely damaged ones were replaced.
The impact of the project was attained to through informal surveys. It may be suitable to invite community members to focus group deliberations to seek their opinions of the respective projects. The views of the public can also be affirmed during the IDP community participation forums.
The projects were undertaken within the parameters of the GTLM Environmental Management Plan (EMP) and the programme did not have a dedicated environmental strategy. Moreover, the environmental impact of the project is unknown, although the GTLM officials aver that the projects had minimal environmental consequences.
GTLM has made significant strides in improving the collection of monies outstanding for the provision of electricity, especially in an environment of weak economic growth and job losses. The finances of the municipality appear to be stable due to the collection efforts and revenue enhancement strategy that was implemented.
The programme is aligned with DBSA policies as well as national, African and international developmental goals. The programme is particularly important within a South African context of repeated electricity outages which was negatively impacting on economic and developmental outcomes.
The programme did deliver the main outputs of the project as per the loan agreement. The programme has led to an improvement in the electricity network leading to fewer power interruptions and providing more households with access to electricity. Furthermore, there has been a reduction in distribution losses although there is room for further improvement in this regard. The reduction in losses contributed to the increase in the GTLM revenue. The finances of the municipality improved between 2018 and 2021 which can be ascribed to the increase in revenue resulting from the upgrade of the electricity network as well as the implementation of the DBSA-led revenue enhancement plan.
Improvement in the supply of electricity (less downtime of the network)
Successfully ramping up its customer base from 0 to over 1 200 households in less than six months in 2020. On its way to reaching more than 3 000 subscribing households by September 2021
Improvement in customer satisfaction (fewer complaints received by the municipality)
182 jobs created, including two women and 54 youth
1 986 households benefitting from infrastructure upgrades
Reduction in distribution losses
Satisfactory spacing of overhead power lines to minimise birds from being electrocuted