Eskom’s plan to use the Expropriation Act for land comes with a price

Eskom is looking to use the Expropriation Act to fast-track its transmission line project in South Africa, but it is unlikely to get a free ride paying ‘nil compensation’.

South Africa is set to massively expand its energy sources as it tries to add more renewable energy to the strained grid.

This will require thousands of kilometres of new transmission lines to be laid across the country to make room for more generation.

Eskom’s 2022 Transmission Development Plan indicated that the country’s transmission infrastructure would need to be expanded by around 14,000 km of extra-high-voltage lines and 170 transformers over the next 10 years.

This would significantly expand the country’s grid, allowing it to accommodate more renewable energy from private producers, at a cost of almost R400 billion.

Unfortunately for Eskom, the project requires large tranches of land to accomplish this, and much of it is privately owned, presenting a significant impediment to the project.

The National Transmission Company of South Africa (NTCSA), a newly formed entity unbundled from Eskom, said it is now considering using the Expropriation Act to acquire the needed land.

The NTCSA said it has exhausted negotiations with landowners for transmission line servitudes, some of which have lasted up to four years without success.

While a state-owned entity like Eskom or the NTCSA cannot expropriate land, it can apply to the Department of Public Works to expropriate land on its behalf.

The Expropriation Act allows the state to acquire property for a public purpose or in the public interest, subject to just and equitable compensation being paid.

However, the new law has faced severe criticism for allowing the state to acquire properties with ‘nil compensation’, in very strict circumstances.

This raises a question for many landowners on whether they will be compensated if their property is used for power lines under the Act.

Nil compensation unlikely

Although the most debated part of the Expropriation Act is the provision for “nil compensation,” there are still many requirements that the state must meet to achieve that outcome.

This includes the Act stating that it must be “just and equitable” for no compensation to be paid. This is only applicable for land that is expropriated in the public interest.

Cliffe Dekker Hofmeyr’s Jackwell Feris and Charles Green said that there is a critical legal distinction between “public purpose” and “public interest” within the Expropriation Act:

• Public purpose relates to expropriation for a specific public use. This includes the development of tangible public infrastructure like roads, schools, dams and energy transmission lines.
• Public interest is defined more broadly to include the nation’s commitment to land reform and providing equitable access to natural resources to address the results of past racial discrimination.

The development of infrastructure like energy transmission lines is seen as a public purpose, meaning that the provisions for “nil compensation” do not apply.

Affected parties will thus be entitled to just and equitable compensation per the Expropriation Act.

The experts added that nil compensation is not automatic, and an expropriating authority or the court must consider all relevant circumstances and ensure a fair outcome.

The Expropriation Act lists specific, non-exhaustive examples where nil compensation might apply, such as:

• Unused land held purely for speculative purposes.
• State-owned land that an organ of state is not using for its core functions.
• Land that the owner has abandoned.
• Where the property’s market value is less than or equal to the state’s direct investment in it.

“Any attempt to expropriate land for infrastructure under the ‘public interest’ banner to avoid payment would be legally flawed and subject to legal challenge and judicial review,” they said.

Although it is yet to come into effect, the Expropriation Act will provide a clear legal framework for all of this to take place.