Municipalities are in a death spiral and the only way out is to cut their dependence on Eskom, says Nhlanhla Ngidi, head of energy and electricity for the South African Local Government Association (Salga). But in spite of pleas from Salga, the policy and regulatory environment doesn't allow it. Changes enabling municipalities to purchase electricity directly from independent power producers should have been made "yesterday" already, says Ngidi. Their biggest source of revenue is the margin they make from on-selling the electricity they get from Eskom. But with insecurity of supply and spiralling tariffs, the customers they rely on selling to for their survival are making their own plans. "Municipalities are dependent on large industrial and commercial customers who are developing initiatives to have their own generation," he says. "That could be very catastrophic for the revenues of these municipalities if they're unable to respond to retain these customers as part of a new busines...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.

Questions or problems? Email or call 0860 52 52 00. Got a subscription voucher? Redeem it now