Expropriation Act key to Eskom’s big grid expansion plans

Eskom’s ambitious expansion plans for its transmission grid will require it to acquire some private land or land rights, for which the new Expropriation Act will be key.

However, law firm Cliffe Dekker Hofmeyr (CDH) has confirmed that the utility will not be able to expropriate this land without compensation using the Act.

Eskom indicated in its 2022 Transmission Development Plan (TDP) that the country’s transmission infrastructure would need to be expanded by around 14,000 km of extra-high-voltage lines and 170 transformers.

This is expected to bring on board 105,865 MVA of transformer capacity over the next 10 years. This project will, therefore, significantly expand the country’s grid, allowing it to accommodate more renewable energy from private producers.

South Africa has never embarked on a project this big, and it is estimated to cost around R372 billion.

CDH’s Jackwell Feris and Charles Green explained that, for this ambitious project to happen, the state will need to acquire land or rights over land, much of which is privately owned.

This is where South Africa’s new and controversial Expropriation Act comes into play. 

President Cyril Ramaphosa signed this legislation into law in January 2025 and it is intended to replace the Expropriation Act of 1975.

The new legislation adopted the language of Section 25 of the Constitution, which speaks to the right to property and the conditions under which property may be expropriated.

Specifically, the new Act stipulates the powers of the “expropriating authority”, an organ of state or person legislation empowers to expropriate property. 

Under the new legislation, for example, the Minister of Public Works and Infrastructure would be an expropriating authority.

The controversy surrounding the new Act lies in the express power it gives the expropriating authority to offer nil compensation for land expropriation in certain circumstances, including public interest purposes.

The authority can only expropriate for nil compensation after considering all relevant circumstances, including the ones specifically listed in section 12(3) of the Act.

Eskom’s nil compensation rights

It is important to note that South Africa’s Electricity Regulation Act empowers a company with a license to generate or transmit electricity, like Eskom, to initiate an expropriation process.

However, the licensee itself cannot expropriate land. Instead, it must apply in writing to the Public Works Minister, who can then use the state’s power – through the Expropriation Act – to expropriate the land on the licensee’s behalf.

Feris and Green explained that the 2024 Expropriation Act makes a critical legal distinction between the two grounds for expropriation: public purpose and public interest. 

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.

In contrast, 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.

Feris and Green said the Expropriation Act’s stipulations around nil compensation are not a blanket policy and are strictly limited.

For example, the Expropriation Act states that it may be “just and equitable” to pay nil compensation only when land is expropriated in the public interest.

Therefore, nil compensation is not an option for land expropriated for a public purpose, such as for building transmission lines.

“It seems from the Expropriation Act that an expropriating authority or the court must consider all relevant circumstances and ensure the outcome is fair,” they said.

The Expropriation Act also lists specific, non-exhaustive examples where this might apply, including:

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

Feris and Green reassured landowners that, once it comes into effect, the Expropriation Act will provide a clear legal framework. 

They said that, for landowners and others affected by the development of infrastructure like energy transmission lines, the position is clear.

Firstly, expropriation for such projects falls under “public purpose”, not public interest. Therefore, the provisions for “nil compensation” do not apply.

This means affected parties will be entitled to just and equitable compensation as determined by the Expropriation Act.

“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.