Completed Kannaland energy deal a dire need

THE struggling Kannaland Municipality hopes a multibillion-rand solar power plant can help boost the community’s economy.

Placed under administration by the Western Cape government last year, the municipality is in the process of finalising a R1.2bn public-private partnership with technology company, InovaSure.

The potential 25-year deal would allow the municipality to generate and distribute power by purchasing electricity from Eskom at off-peak rates before reintroducing it to the grid for morning peak times, as well as generate power during the day for peak times during the evening.

The National Treasury approved the project, the first of its kind, last year. Municipality manager Reynold Stevens said attempts to generate an income despite its precarious financial situation initiated the deal.

“Kannaland is plagued by limited financial income and is in various processes related to administration and has gotten weaker in terms of sustainability,” he said.

“The project is not only about energy production but water and sewage, which the municipality has been experiencing problems with. It will also provide revenue solutions for the municipality.

“The municipality currently has a demand of six megawatts and the first phase of the project will be a four-megawatt solar power plant with a second phase focusing on distributing to the

This investment gives us the opportunity to move out of a large hole Reynold Stevens KANNALAND MUNICIPALITY MANAGER

whole district municipality.

“It will be a huge cost-saving (project) for the municipality in terms of what it pays for electricity,” Stevens added.

“Energy generation by the plant and others will ease the troubles experienced by Eskom.”

Chief financial officer Roland Butler said the municipality has a debt of R35 million along with a troubling asset-to-liability ratio.

“The council inherited R100m in outstanding debt and we have managed to bring it down to R35m after making it a priority for the last three to four years,” he said.

In 2016, the municipality had an overdraft of R1.8m, a debt burden of R37.5m and owed Eskom R12m. Last year, it was listed as the only provincial municipality which had entered into a payment agreement with the power utility to avoid disconnection.

Given the municipality’s financial predicament, InovaSure said it was important to highlight that it is not an independent power producer but rather following a constitutional right afforded to municipalities to generate and supply its own electricity.

“We supply technology in a way that does not take away assets from a municipality – we assist with finances and assets,” said InovaSure’s chief engineer Jaco de la Rouvière.

Stevens expects construction of the plant to begin in October once the public participation and further consultation with provincial and national treasuries are completed.

The municipality anticipates as many as 20 000 jobs to be created in the construction sector due to the project, he added, as well as several others once the facility was fully operational.

“This investment gives the municipality the opportunity to move out of the large hole we are in. Time is against us and the only aspect that can change that is technology that will catapult us forward,” Stevens said.