Strengthening The Sustainability of Ray Nkonyeni Local Municipality
Ugu District Municipality, within which Ray Nkonyeni is situated, required support for infrastructure upgrades to its water and sanitation systems.
Ray Nkonyeni Local Municipality required assistance to strengthen its institutional and technical capacity to provide reliable electricity services.
Ugu District Municipality, within which Ray Nkonyeni is situated, required support for infrastructure upgrades to its water and sanitation systems. The poor condition of ageing infrastructure created poor service and revenue losses and an inability to support electricity network growth and bulk water services, limiting the local municipality’s ability to attract industry and develop.
The DBSA took a multi-year comprehensive and integrated approach using current DBSA programmes to improve the area’s sustainability between 2017 and 2021. These initiatives were supported by strengthening the municipality’s balance sheet.
The DBSA provided infrastructure planning, spatial planning, project preparation, financing, embedded generation, asset care and revenue enhancement to Ray Nkonyeni Local Municipality, along with project preparation support and development to Ugu District Municipality.
During the 2018/19 financial year, the DBSA and Ray Nkonyeni Local Municipality, supported by professional service providers, spent R1 million to develop an Electricity Master Plan. This Master Plan identified projects to the value of R201 million that needed to be constructed. The municipality prioritised the following projects for implementation during the first phase:
Project Value
Oslo Beach Electricity Substation R55 million 11kV interconnector, 4.5 million Centralised network control centre and system R3 million Total R62.5 million
The Bank also contributed project preparation services to the value of R7.5 million for the following projects:
- Ray Nkonyeni Local Municipality power system interconnector between Marburg and Port Shepstone
- Providing bulk capacity by the application of diversity between the two Eskom points of delivery (PODs) to reduce costs
- A Supervisory Control and Data Acquisition (SCADA) system to facilitate remote control and monitoring of the electrical network
Of these, R2 million worth of projects were prepared during the 2020/21 financial year. The Bank and the municipality developed and completed a roads and stormwater project during the 2019/20 financial year at a cost of R3.5 million.
The DBSA/Ray Nkonyeni partnership also implemented a revenue enhancement programme that increased municipal revenue by R3.5 million during the 2020/21 financial year.
This programme included the following initiatives:
- Electricity tariff structure - Electricity tariff structure re-design & NMD adjustment from 16,5MVA to 20,0MVA (R1,750,000.00)
- Metering and land use audit - Meter and land-use audits to reduce electricity losses and to increase revenue for the municipality (R1,750,000.00)
- Increase of Notified Maximum Demand (NMD) During the reporting period, DBSA approved infrastructure loan funding for two municipal projects to the value of R41 million, namely:
- Electricity meter replacement
- Network strengthening
For the Ugu District Municipality, the DBSA contributed project preparation services for developing Ugu’s bulk water services capacity. These projects included:
- Preparation support to upgrade uMbango Waste Water Treatment Works (WWTW) from 5 ML/D to 12 ML/D
- Melville 2 ML/D WWTW development The Bank has identified a bulk energy project that can be funded through embedded generation in the new financial year. Five town centres have partnered with ICLEI – Local Governments for Sustainability and UK PACT to undertake a feasibility study that will provide technical and funding options. This study is scheduled for completion in November 2021.
The integrated approach enabled the DBSA to address the bulk capacity and mobility/transport challenges experienced within the municipality through Electricity, Roads and Stormwater master plans, which provide investors with confidence in the area. The master plans have also informed the municipality’s infrastructure plans, including new infrastructure and assets that require upgrade and maintenance. Feasibility for embedded solar generation may provide additional energy system capacity to enable growth. Revenue enhancement support (tariff structure, metering, integrated billing system) has stabilised the revenue collection and financial stability of the municipality, giving further confidence to lenders.
By 2021 Ray Nkonyeni Local Municipality was being seen as an investment destination:
- The municipality held its first workshop on Presidency driven investments on 17 March 2021
- Volvo introduced car and bus manufacturing while committing to investing in the municipality
- The United Arab Emirates’ investment is set to focus on steel manufacturing, harbour development, airport precinct and petroleum manufacture, storage and distribution
Ray Nkonyeni Local Municipality Electricity Master Plan identified projects to the value of R201 million that needed to be constructed.
Produced an increased municipal revenue by R3.5 million during the 2020/21 financial year.
The DBSA contributed project preparation services for developing Ugu’s bulk water services
Ray Nkonyeni Local Municipality