President Cyril Ramaphosa has left the door open to excluding a section in the Electricity Regulation Amendment (ERA) Act that could negatively affect the revenues municipalities raise from electricity sales when the legislation is officially implemented.

Ramaphosa signed the ERA on August 20, with a clause stating that the Act would come into operation “on a date determined by the President”.

Prior to the President providing assent to the legislation, the South African Local Government Association (Salga) voiced its strong objection to those parts of the ERA that the organisation said would undermine the exclusive right of municipalities, as outlined in the Constitution, to reticulate electricity.

Salga had also indicated that it was preparing to take legal action should the Act be signed and in his address to the Just Energy Transition Municipal Conference on August 26, Salga president Bheki Stofile reiterated that position, stating that the Act posed a new challenge to local government.

“A clause inserted into the Bill after the public participation process, and signed into law, threatens to remove a significant portion of municipalities' remaining electricity distribution functions.

“Salga has repeatedly implored both Parliament and the President to reconsider this clause.

“We hope the effective date of the Bill will exclude this clause, as failure to do so may undermine the very purpose of our discussions today — the municipal energy transition,” Stofile stated.

In his subsequent address, Ramaphosa said he understood that Salga “would like some exceptions to be inserted” once the legislation was implemented and indicated a willingness to entertain further discussions on those exclusions ahead of the Act’s implementation.

However, the President continued to underline the importance of the legislative changes that would be enabled by the ERA, saying that these “paved the way for a new, competitive electricity market”.

“The reforms contained in the law must help to speed up decarbonisation. But more than that, they must result in a better deal for households and businesses,” Ramaphosa said.

In a subsequent panel discussion, Electricity and Energy Minister Dr Kgosientsho Ramokgopa expressed confidence that a solution could be found “without going to court”.

For his part, Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa expressed relief at Ramaphosa’s willingness to engage further on the matter before the Act came into force.

Hlabisa, who is also the leader of the Inkatha Freedom Party, which is a participant in the Government of National Unity, indicated that he would be taking his lead from the President in helping to facilitate the interventions required to reach an acceptable resolution.

Meanwhile, Deputy Finance Minister David Masondo reported that the future revenue model for municipalities was also receiving priority attention under Operation Vulindlela, including how the revenue gap arising from changes to the electricity sector could be closed.

The conference itself had been convened to improve coordination and alignment at the municipal level with the Just Energy Transition Investment Plan (JET-IP), which estimated that investments of about R319-billion were required between 2023 and 2027 to maintain and expand municipal and Eskom electricity distribution networks.

It was agreed that a JET Municipal Forum and secretariat would be established following the conference to support the implementation of the JET-IP at the local government level.

The forum would prioritise the establishment of three workstreams to support capacity building, finance structuring and energy access initiatives across municipalities, starting with the top 20 licensed municipal distributors.

It was anticipated that the forum would also help empower municipalities to access a portion of the $11.7-billion in concessional funding that had been extended by various international governments to help South Africa implement its JET-IP.