The Role of Local Government in implementing Biogas Projects Barry Coetzee, Head: Integrated Waste Management, Strategy & Policy Solid Waste Management Dept, City of Cape Town

Constitution of SA, Schedule 4 & 5: Municipal services include the provision of water, sanitation, waste and electricity reticulation services. Municipal Systems Act (Act 32 of 2000): S.4 Rights & duties of municipal councils strive to ensure that municipal services are provided to the local community in a financially and environmentally sustainable manner. S.11 Executive & legislative authority Develop & adopt policies, plans, strategies, targets. Provide municipal services to local community or appoint service providers per S.78. Promote a safe and health environment. Do anything within its legislative and executive competence. Legal Context: Roles & Responsibilities of a municipality

Role of local government in implementing biogas projects (1) Ensure sustainability/ sustainable development: Land use Environment: prevent impact & damage, conserve Create socio-economic benefits Financial sustainability Plan, set targets for spatial efficiency, effectiveness, sustainability in terms of growth; Provision of accessible, viable, sustainable, affordable municipal services: Water, sanitation, waste, electrical reticulation (infrastructure & services) Set affordable tariffs (& rates) Assess alternative service delivery mechanisms: Technology – alternatives, viability, Funding Internal/external operation, repairs, maintenance (skills, etc) Impact on jobs/ job creation Public and labour consultation

Role of local government in implementing biogas projects (2) Once Council has resolved that alternative is viable, feasible, sustainable: Engineering & Concept design, Final design, Infrastructure & Equipment – bid specifications, tender (Supply Chain Regs: procure goods & professional services transparently) Plans approval EIA of proposed infrastructure development (Supply Chain Regs: procure professional services transparently; EIA Regs: Public consultation) Land – Council approval if Council-owned, rezoning application Hazard Assessment (OHS Act MHI Regs) DME application: Independent Power Producer application/ authorisation Permit/ licence/authorisation to operate (Water Act, NEMA, Waste Act) Funding: Budget – tariff setting, Possible loans & grants, Private funding, e.g. PPP – Council approval/ National Treasury authorisation CDM – cream on the cake, but not without risk or complexity: Transaction advisor

Municipal Systems Act (Act 32 of 2000): S.73 General Duty – Municipal Services must (a) be equitable and accessible: (b) be provided in a manner that is conducive to - (i) the prudent, economic, efficient and effective use of available resources; and (ii) the improvement of standards of quality over time; (c) be financially sustainable [read “affordable”]; (d) be environmentally sustainable; and (e) be regularly reviewed with a view to upgrading, extension and improvement. * should be read in conjunction with the provisions of the Municipal Finance Management Act (MFMA) Legal Context: Roles & Responsibilities of a municipality

The Context of Roles & Responsibilities Municipal Systems Act (Act 32 of 2000): “financially sustainable”, in relation to the provision of a municipal service, means the provision of a municipal service in a manner aimed at ensuring that the financing of that service from internal and external sources, including budgeted income, grants and subsidies for the service, is sufficient to cover the costs of— (a) the initial capital expenditure required for the service; (b) operating the service; and (c) maintaining, repairing and replacing the physical assets used in the provision of’ the service.

The Context of Roles & Responsibilities Municipal Systems Act (Act 32 of 2000): “environmentally sustainable”, in relation to the provision of a municipal service, means the provision of a municipal service in a manner aimed at ensuring that— (a) the risk of harm to the environment and to human health and safety is minimised to the extent reasonably possible under the circumstances; (b) the potential benefits to the environment and to human health and safety are maximised to the extent reasonably possible under the circumstances; and (c) legislation intended to protect the environment and human health and safety is complied with.

Legal Context: Roles & Responsibilities of a municipality S.74 Tariff policy (1) A municipal council must adopt and implement a tariff policy on the levying of fees for municipal services provided by the municipality itself or by way of service delivery agreements, and which complies with the provisions of this Act and with any other applicable legislation. (2) A tariff policy must reflect at least the following principles, namely that— (d) tariffs must reflect the costs reasonably associated with rendering the service, including capital, operating, maintenance, administration and replacement costs, and interest charges; (e) tariffs must be set at levels that facilitate the financial sustainability of the service, taking into account subsidisation from sources other than the service concerned; (f) provision may be made in appropriate circumstances for a surcharge on the tariff for a service; … (h) the economical, efficient and effective use of resources, the recycling of waste, and other appropriate environmental objectives must be encouraged:

Legal Context: Roles & Responsibilities of a municipality S.77. Occasions when municipalities must review and decide on mechanisms to provide municipal services A municipality must review and decide on the appropriate mechanism to provide a municipal service when— (a) preparing or reviewing its integrated development plan; (b) a new municipal service is to be provided; (c) an existing municipal service is to be significantly upgraded, extended or improved;

Municipal Systems Act (Act 32 of 2000): S. 78 Criteria and process for deciding on mechanisms to provide municipal services (1) When a municipality has in terms of section 77 to decide on a mechanism to provide a municipal service in the municipality or a part of the municipality, or to review any existing mechanism— (a) it must first assess— (i) the direct and indirect costs and benefits associated with the project if the service is provided by the municipality through an internal mechanism, including the expected effect on the environment and on human health, well-being and safety: (ii) the municipality’s capacity and potential future capacity to furnish the skills, expertise and resources necessary for the provision of the service through an internal mechanism mentioned in section 76(a): (b) it may take into account any developing trends in the sustainable provision of municipal services generally. Legal Context: Roles & Responsibilities of a municipality

Municipal Systems Act (Act 32 of 2000): S. 78 Criteria and process for deciding on mechanisms to provide municipal services (2) After having applied subsection (1), a municipality may— (a) decide on an appropriate internal mechanism to provide the service; or (b) before it takes a decision on an appropriate mechanism, explore the possibility of providing the service through an external mechanism mentioned in section 76(b). Legal Context: Roles & Responsibilities of a municipality

Municipal Systems Act (Act 32 of 2000): S. 78 Criteria and process for deciding on mechanisms to provide municipal services (3) If a municipality decides in terms of subsection (2)(b) to explore the possibility of providing the service through an external mechanism it must— (b) assess the different service delivery options in terms of section 76(b), taking into account— (i) the direct and indirect costs and benefits associated with the project, including the expected effect of any service delivery mechanism on the environment and on human health, well-being and safety; (ii) the capacity and potential future capacity of prospective service providers to furnish the skills, expertise and resources necessary for the provision of the service; (iii) the views of the local community; (iv) the likely impact on development and employment patterns in the municipality; and (v) the views of organised labour. Legal Context: Roles & Responsibilities of a municipality

Conclusions Consideration of changing mechanisms – MSA S.78 assessment (all aspects of funding, staffing, financial impacts and risk, economic implications, etc) Financial risk will be considered in terms of affordability to Council and its rate payers Land use authorisation – MFMA: requires Council approval Land use for biogas applications: will probably require zoning approval due to nature of processes Environmental Impact Assessment will be required Public and labour consultation necessary Funding decisions that involve a Public Private Partnership (PPP): Council approval and careful legal consideration i.r.o.. Carbon credits, CDM process IMPLEMENTATION IS VERY COMPLEX: NEEDS GOOD UNDERSTANDING OF LEGISLATION, GOOD PLANNING & PROJECT MANAGEMENT ONCE A COUNCIL HAS APPROVED THAT IT WILL UNDERTAKE MAJOR CHANGE BASED ON GOOD ASSESSMENT OF RISK AND VIABILITY

THANK YOU, DANKIE, ENKOSI