No formal risk assessment was undertaken to evaluate the potential impact on the Nelson Mandela Bay electricity network before the R25m transformer was removed from the Sonop substation and installed at Coega Steels’ premises.
This was disclosed by acting municipal manager Lonwabo Ngoqo in an affidavit in which he asked the Gqeberha high court to set aside the lease agreement with the company, arguing that it breached municipal regulations.
The 132/22 kV 63 MVA transformer has been in the possession of the Coega IDZ-based company for seven months.
The municipality filed court papers on January 22, following an unsuccessful attempt to reclaim the transformer in November.
Coega Steels refused, maintaining that it was in bona fide possession of the equipment under a valid lease agreement.
In the court filings, Ngoqo said that though a memorandum signed with Coega Steels beforehand stated that a formal risk assessment would be conducted before a lease was concluded to evaluate potential impacts on the electricity network, no municipal record of such an assessment existed.
“Though the memorandum dated September 4 2025 addressed to the mayor [Babalwa Lobishe] stated that ‘a formal risk assessment will be conducted to evaluate potential impacts on the network before the transformer is deployed to Coega Steels’, no municipal record or report is showing that such risk assessment was done to date, notwithstanding that the lease agreement was signed and entered into on September 11 2025,” Ngoqo wrote.
“The lease agreement is for a fixed-term period of one year, and there is no clause in the lease agreement that deals with a situation of an emergency at the Greenbushes or Swartkops substations, and therefore no contingency measures are in place for a rapid redeployment of the transformer should the municipality urgently require its use.”
Ngoqo also revealed that the insurance certificate provided to the municipality for the transformer was only for three months and not the 12 months the municipal asset would be at the Coega properties.
“An insurance certificate from Efficient Insure was annexed to the lease agreement, which purports to confirm that the transformer had been insured for the sum of R30m for the period September 9 2025 to November 30 2025,” he said.
The decision to lease the transformer came after Coega Steels appealed to the municipality, saying its failed transformer had brought production to a halt and was costing the company about R700,000 a day in losses.
This directly and indirectly affected its clients, suppliers and about 300 employees, many of whom were placed on short-term rotational work.
Coega Steels also signalled plans to expand its operations by the end of 2025, a move expected to drive a significant increase in its annual electricity bill.
Between January and July 2025, it paid R141m to the metro, and this was estimated to rise to R360m.
Ngoqo said the lease was unlawful as it did not comply with the Municipal Asset Transfer Regulations, which required public participation and council approval before a municipal asset could be relocated.
“Tellingly, the chief financial officer [Jackson Ngcelwane] did not sign the recommendations but referred to the comments of the municipality’s budget and treasury department as contained in the memorandum.
“Decisions taken by the former acting municipal manager [Ted Pillay] and/or mayor [Babalwa Lobishe] to let the transformer to the respondent should be declared unlawful and invalid, and thus reviewed and set aside, as they were irregularly and unlawfully taken and are irrational in the absence of compliance with the mandatory provisions of the asset regulations.
“Subsequent lease agreement entered into between the applicant and the respondent for the lease of the transformer, which depends for its validity on the validity of the decisions, should be declared unlawful and invalid, and thus be reviewed and set aside, as it was irregularly and unlawfully signed for the reasons stated above, and for the further reasons stated below,” he wrote.
Lobishe has faced a major backlash for signing off on the removal of the transformer, with some in her party calling for her to go on special leave.
GOOD councillor Lawrence Troon has reported a case at the Humewood police station against Pillay, which is now under investigation by the Hawks.
Kuban Chetty Inc represents the municipality.
Coega Steel has not yet filed responding papers, but has filed its notice to oppose.
The company’s lawyer, MC Botha, did not respond by the time of publication.
