R5.1 Billion, 20 Years: DA Faces Questions Over Cape Town Electricity Contract

The City of Cape Town’s decision to enter into a R5.1 billion electricity supply agreement with an American-registered company has sparked questions about transparency, public accountability and the long-term financial commitments being made by the Democratic Alliance (DA)-led administration.

The 20-year agreement involves Make A Difference Ventures, which will supply 40 megawatts of solar-generated electricity from a facility in Philippi. The deal forms part of the city’s broader strategy to reduce its dependence on Eskom and secure alternative electricity sources.

However, the agreement has attracted criticism over the company’s ownership, the procurement process and the extent of public participation before the contract was approved.

According to reports, Cape Town’s council authorised municipal manager Lungelo Mbandazayo to conclude the agreement, which carries an estimated value of R5.1 billion over its 20-year duration.

The appointment of Make A Difference Ventures was approved through a procurement deviation in February 2025. Council documentation also records that National Treasury raised questions about compliance during the process.

The public participation process reportedly attracted only one submission from a member of the public, raising further concerns about whether residents had sufficient opportunity to scrutinise such a substantial long-term commitment.

Critics have questioned why a contract worth billions of rand was approved through a deviation process and have called for greater disclosure about the company’s beneficial ownership, shareholders and financial interests.

The company’s American registration has also become a point of political debate, with questions being raised about who ultimately controls the business and whether sufficient safeguards exist to protect the city’s interests.

The DA-led administration, however, has defended the agreement on the grounds that purchasing electricity from independent power producers will reduce costs and improve energy security.

The City maintains that electricity supplied under the agreement will initially cost between 19% and 21% less than its current Eskom rates. It also estimates that the arrangement could generate savings of approximately R1.7 billion over the contract period.

Another significant feature of the agreement is its pricing structure. Unlike Eskom’s electricity increases, which have historically been unpredictable, the contract’s energy rates will be linked to the Consumer Price Index (CPI).

The agreement will be funded through the city’s bulk electricity account, meaning the financial implications will form part of its electricity procurement costs.

Opposition to the agreement has centred on whether the projected savings justify committing the municipality to a private electricity supplier for two decades.

The controversy also raises broader questions about the management of public resources and whether future municipal administrations will have sufficient flexibility to respond to changing energy market conditions.

Critics are demanding that the City publish the complete agreement, disclose the company’s ownership structure and make the National Treasury correspondence available for public scrutiny.

As Cape Town pursues its energy diversification strategy, the challenge will be ensuring that the transition away from Eskom is accompanied by transparency, accountability and adequate protection for electricity consumers.