The dispute arose when mining company Siboney Gold Limited (Sibeney) sought a way to bypass Eskom's servitude on certain properties – where Eskom had existing land rights in respect of properties it did not own – as well as its 132 kV transmission line. Siboney wanted to build a 6 km power line with the aim of developing a 50MW behind-the-meter solar photovoltaic (PV) project and then connect this PV project to the Kloof substation to supply power to Siboney's Kloof gold mine in the Gauteng province.
Eskom refused, citing regulatory, operational and “orderly development” concerns. It proposed a 'wheeling' option via its Lebanon substation. Wheeling occurs when electricity is produced in one area and connected to the grid but sold to an end user in a remote area of the grid.
The High Court reviewed the case. In its cataclysmIn an order handed down on 18 February, the court rejected Eskom's denial and replaced it with an order to give up the way with costs.
The court found that Eskom acted with “ulterior motives” and in bad faith, made material errors of law, misapplied its own Waiver policies and relied on unproven operational risks.
It said Eskom tried to use Waylive to force a wheeling solution and made the decision “irrational, unreasonable and unlawful” under the Promotion of Administrative Justice Act 3 of 2000 (PAJA).
The judge said that such efforts were contrary to Eskom's VELIVES policy and the South African government's broader policy objectives of facilitating private sector power generation to help diversify the country's energy mix. Rather, the judge highlighted that there was “nothing” in the state-owned entity's policy that would give it the right to “use waivers to block the development of renewable energy projects or as leverage to impose Eskom's preferred commercial terms”.
Naina Kara of Johannesburg-based Pinsent Masons said the ruling would have “far-reaching implications” not only for energy developers, but also for landowners and rights-holders navigating Eskom slavery: “The court’s finding that Eskom acted with ulterior commercial motives and unfairly applied its own wayleave policies underlines an important principle: Eskom’s servitude rights do not give it the right to obstruct. “Lawful land use, development or access where statutory requirements are met.”
Cara said the decision would provide “welcome clarity” to energy sector stakeholders that “slavery cannot be used to impose disproportionate commercial terms, delay strategic projects or thwart private-power initiatives”.
From a business perspective, Kara said, the decision is expected to reduce risks to renewable energy investments, which require infrastructure to bypass Eskom slavery – a common feature in mining, industrial and agricultural developments. Organizationally, he said, it empowers property-owning corporates to assert their rights more confidently, knowing that the process of giving way is administrative and mechanical, not discretionary.
Rob Morson, Africa infrastructure and energy specialist at Pinsent Masons in London, said the court's decision will also be of great relevance to international investors in South Africa's energy sector: “This judgment ultimately strengthens the bankability of self-generation projects by ensuring that servitudes operate as intended: to balance access and security, and not to control the commercial feasibility of development taking place legally on private land. This affirmation of rights builds confidence in the South African legal system and serves the good Gives a signal.” Private sector energy investment, operational flexibility and long-term asset based infrastructure planning.