18 March 2026
| Construction, Engineering and Infrastructure Law
The Johannesburg High Court recently handed down judgment in Sibanye Gold (Pty) Ltd and Others v Eskom Holdings SOC Ltd and Others, a decision with important implications for administrative action taken by state-owned entities.
The judgment comes at a time when South Africa’s energy policy is firmly directed towards increasing private participation, accelerating renewable energy projects, and reducing reliance on Eskom, reinforced by President Ramaphosa’s address at the 2026 Africa Energy Indaba. Here, the President emphasised the need to expand capacity, develop natural resources and diversify energy sources, and improve access to the transmission grid.
Despite this, the case illustrates the ongoing tension between policy ambition and institutional practice.
The applicants, Sibanye Gold (Pty) Ltd, Sibanye Solar PV (Pty) Ltd, and Sibanye Stillwater Ltd, planned to develop a large-scale power plant to supply electricity mainly to their Sibanye’s Kloof mining operations. The plant was intended to operate “behind the meter”, meaning the electricity generated would be used directly by the mine, reducing its reliance on Eskom’s national grid.
To construct the facility, the applicants required a wayleave from Eskom to run a power line across Eskom’s servitude. A formal wayleave application was submitted in January 2023, but Eskom refused the application.
The applicants challenged Eskom’s decision to refuse their wayleave application (the decision) on the following basis:
- the decision constituted administrative action as contemplated in the Promotion of Administrative Justice Act 3 of 2000 (PAJA), and,
- that it had failed to meet the requirements of lawful administrative action.
The applicants sought to review and set aside Eskom’s refusal in terms of section 6 of PAJA and further sought a substitution order in terms of section 8.
The court was required to determine two primary issues: first, whether Eskom’s refusal constituted administrative action under PAJA, and second, whether the decision complied with the requirements of lawful administrative action.
The court found that Eskom’s refusal did constitute administrative action, and therefore, it is subject to judicial review.
The applicants advanced five grounds for the review of Eskom’s refusal.
First, Eskom acted for an improper purpose. It was accepted that the project would reduce its revenue and took this into account in refusing the wayleave. The court held that this was an ulterior motive. A wayleave is a purely administrative permission to access Eskom’s servitude. It cannot be used to block a project or to protect Eskom’s revenue. This constituted bad faith and an ulterior purpose under PAJA.
Second, Eskom’s decision was based on a material error of law. It argued that it had a “right of first refusal” under the Electricity Regulation Act to determine how the project should connect to the grid. The court rejected this interpretation, confirming that no such right exists in the legislation and that the project fell within the Schedule 2 exemption regime. This triggered review under section 6(2)(d) of PAJA.
Third, Eskom misinterpreted and misapplied its own policies. Its wayleave policy envisages a “purely mechanical, administrative matter” and does not confer a discretion to refuse once requirements are met. Eskom attempted to rely on other internal policies that were not part of its original reasons. The court found this to be an impermissible after-the-fact justification and a misapplication of policy.
Fourth, Eskom relied on alleged safety and operational concerns that were not supported by the evidence. These concerns did not appear in the Rule 53 record and were not substantiated by its technical teams. The court held that the decision was not rationally connected to the information before Eskom.
Finally, Eskom improperly sought to use the wayleave process to compel the applicants to adopt a wheeling arrangement. This was not part of the administrative enquiry. The court held that Eskom was not entitled to use the wayleave process to impose its preferred commercial arrangement, rendering the decision irrational, unreasonable and unlawful.
In assessing these contentions, against the factual backdrop, the court highlighted how the government had stressed the importance of the rapid rollout of private electricity projects, and how, apart from the wayleave, the applicants had obtained all necessary regulatory and financial approvals.
The only remaining obstacle was Eskom’s refusal to grant the wayleave.
For all of these reasons, the court set the decision aside.
Importantly, the court went further and substituted the decision with one granting the wayleave. Applying Trencon, the court held that it was in as good a position as Eskom to make the decision and that the outcome was a foregone conclusion. The process, that it was intended to be a quick, administrative one, had taken almost a year.
In doing so, the court exercised its powers under section 172(1)(b) of the Constitution and section 8 of PAJA, confirming that substitution is appropriate where the facts are clear and reconsideration would serve no purpose.
This judgment makes it clear that Eskom’s powers are not unfettered. When exercising public power, it is bound by the constraints of PAJA and the Constitution. Administrative action cannot be used to achieve collateral commercial objectives.
The decision also underscores that courts will intervene decisively where those limits are crossed. Where the facts are clear, the process has been misused, and the outcome is inevitable, a court will not hesitate to substitute the decision rather than remit it to the decision-maker for reconsideration.
More broadly, the case highlights a growing tension in South Africa’s energy sector. While policy increasingly supports private generation and renewable energy, resistance at an administrative level can delay or obstruct that transition. This judgment signals that such resistance will not withstand legal scrutiny.
Ultimately, Sibanye v Eskom is a reaffirmation of a simple principle: public power must be exercised lawfully, rationally, and for the purpose for which it was given. Where it is not, the courts will step in to correct it.
