R15 billion North West power deal on ice

Matlosana Local Municipality’s surprise takeover of the controversial R15 billion Gas-to-Energy plant has been put on hold after the council did not agree to a proposal to accept control of the project and enter into a Public-Private Partnership.

This comes after opposition councillors and some in the incumbent ANC raised red flags over glaring unanswered questions and potential legal non-compliance regarding the massive project in the North West.

Mayor Fikile Mahlophe tabled a handover proposal for approval at a Special Council Meeting on 6 May.

The proposal included not only accepting control of the project but also entering into a Public-Private Partnership (PPP) with Urban Blue International, a little-known company selected for the contract.

“The recent announcement by the Executive Mayor regarding the Gas-to-Power Plant project… came as a surprise to Council members,” said DA caucus leader Gerhard Strydom.

The plant, aimed at generating 99MW of power near Klerksdorp, has been mired in controversy since North West MEC for Economic Development Bitsa Lenkopane ceremonially handed the project to Mahlophe on 15 April.

Lenkopane claimed the plant would help Matlosana cut Eskom dependence, reduce costs from technical losses, and gain greater control over its energy infrastructure.

However, after the handover, national officials, including Energy Minister Dr. Kgosientsho Ramokgopa and regulator Nersa, told Rapport that they were not informed about the project.

Urban Blue International says on its website that it is a South African firm, established in 2017, offering energy solutions.

Further investigation by the publication revealed that the company lists its business address with the Companies and Intellectual Property Commission (CIPC) at the same premises as a Cape Town sushi restaurant. It is also nearing the completion of its delisting from the CIPC.

Nonetheless, the CEO and sole director, Jing Sun, says that the deregistration is an error and is currently working to rectify the situation.

Jing told Rapport that plans are already underway to fence the 300-hectare site allocated by Matlosana, and that the gas project has been in development for the past three years, with backing from Chinese firm VPower.

A look at the company’s online presence has also raised some suspicions among councillors. For example, their Facebook page is not a business account but a private one with five friends, including its CFO.

Additionally, the company’s website project links do not include actual examples of completed work, or refer to VPower as a parent or affiliated company.

“The DA could not support this proposal due to several unanswered questions about the company involved and the municipality’s non-compliance with prescriptive legislation,” said Stydom.

Legislation, including the MFMA, requires extensive public consultation processes before considering such agreements.

Ultimately, given the big question marks about the legality, the item tabled by the Mayor was temporarily withdrawn for further investigation.

Strydom, who attributes this withdrawal to pressure from his caucus, said that the party supports development initiatives that benefit the community.

“However, we remain equally committed to transparency, accountability, and the rule of law.”

“We will not allow due process to be bypassed, nor will we permit the exclusion of our community’s constitutional right to participate in prescribed public processes,” added Strydom.

Brief background of the project

Matlosana admits it is grappling with ageing electrical infrastructure and rising Eskom bulk supply costs.

Service delivery continues to suffer, with frequent power outages caused by overloaded networks struggling to meet growing demand across townships.

Late Environmental Affairs Minister Edna Molewa on 16 February 2018 published a Government Gazette designating eight Renewable Energy Development Zones (REDZs) for large-scale wind and solar photovoltaic projects, which was expanded upon by her successor Barbara Creecy.

In February 2024, then acting premier of North West Patrick Maloyi announced that they signed a Memorandum of Understanding (MoU) with the Chinese National Import and Export Corporation.

This was to construct R16 billion gas-to-electricity power stations at the City of Matlosana and Moses Kotane Local Municipality, respectively.

“The first phase of this project will see Matlosana producing 198MW of electricity and construction is earmarked for a maximum of ninety days per one hundred megawatts,” said Maloyi, which has since decreased.

The North West provincial government identified the North West Development Corporation (NWDC) as the implementing agent for this. 

Fast forward to April 2024, little-known Urban Blue International negotiated and signed a Power Purchase Agreement (PPA) with the NWDC, pledging a R15 billion investment.

According to the PPA, the company would construct the Gas-to-Power Plant in Matlosana, near Klerksdorp, to produce 99MW of energy.

It would then sell the power to the NWDC, and after 20 years, transfer the ownership of the plant to the NWDC.

The municipality allocated 311 hectares of land for the project. According to Council documents seen by BusinessTech, the fair market value of the property was R34,375 per hectar, or a total of R10.69 million.

This land was initially set to be donated to the provincial government.

However, an April 2025 letter from North West Director General Mosweu Mogotlhe to municipal manager Lesego Seametso noted that NWDC “has implementation challenges.”

This from being a non-licenced entity for the sale of energy as well as long processes regarding the transfer of land from Public Works and Roads and eventually to NWDC. 

The Provincial Executive approved a proposal that they hoped would pave the way for Matlosana to take full ownership and leadership of the project.

Under this proposal, the NWDC would officially transfer the project to the municipality. Matlosana would also be requested to withdraw its earlier donation of the project land to the provincial government.

It was further proposed that Matlosana assume responsibility for all negotiations and agreements with Urban Blue International, including the Build Operate and Transfer Agreement, the Power Purchase Agreement, and the Sovereign Guarantee.

The Provincial Government Task Team currently overseeing the project’s implementation would be retained to provide support throughout the transition.

North West MEC for Economic Development Bitsa Lenkopane ceremonially handed the project to Matlosana’s executive mayor on 15 April, yet some in the council have since raised its suspicions.

South Africa’s electricity market remains heavily regulated, and with the Ministry of Electricity and Energy, along with the regulator Nersa, lacking sufficient knowledge about the project, uncertainty persists.

The City of Matlosana did not respond to questions by time of publication.