Cape Town’s Plans to Buy Power Directly Set Back by Court

The City of Cape Town’s attempt to secure South African municipalities the legal right to select their electricity suppliers has been set back by a court ruling that it must first exhaust negotiations with the government on the matter.

The city currently has to buy all its electricity from national utility Eskom Holdings SOC Ltd., which generates most of its output from coal and is struggling to keep pace with demand. A lawsuit aimed at enabling it to tap more renewable energy from independent producers was initially filed in the High Court in 2017 and was heard in May.

“Essentially the judge didn’t deal with the substantive constitutional decision. It does mean more delays,” said Nicole Loser, a lawyer with the Centre for Environmental Rights, which presented evidence to back up the city’s case. “It’s a procedural judgment.”

Had it won the case, the city of four million people had planned to set up its own power-purchasing office, which would secure supplies within six years. That would have paved the way for other municipalities to follow suit and eroded revenue for Eskom, which is already failing to generate enough revenue to cover its costs and is reliant on government bailouts to continue operating.

©2020 Bloomberg L.P.

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