Eskom, City Power sign memorandum for transfer of electricity distribution
Power utility Eskom and City Power Johannesburg have signed a memorandum of understanding on a possible transfer of electricity distribution.
“Eskom and City Power, the electricity company owned by the City of Johannesburg, have signed a memorandum of understanding (MoU) with a view to concluding a transaction in which Eskom would eventually sell or transfer the distribution of electricity in the parts of Johannesburg currently supplied by Eskom to City Power,” said the entities in a statement.
City Power holds the distribution licence for the rest of the city.
The transaction has not yet been concluded between the parties.
“In terms of the MoU, City Power will conduct its own due diligence study on Eskom’s infrastructure and assets in the areas. Among others, the affected areas include parts of Soweto, Sandton, Orange Farm, Ivory Park, Diepsloot and surrounding areas, in which Eskom currently holds the distribution licence,” the statement reads.
The due diligence study will, according to the entities, consider factors such as 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.
The transfer of electricity distribution to City Power is expected to bring relief for Soweto residents as Eskom has been battling to get a grip on the electricity debt in the area and constant power cuts to compel residents to pay.
This has a led to numerous protests in Soweto, causing a huge headache for the governing ANC, especially ahead of the local government elections. The ANC will be looking at retaining Soweto, one of the most densely populated townships in Gauteng.