Johannesburg - ESkom could this month disconnect the power supply to a group of municipalities in the Free State, North West, Mpumalanga and Northern Cape after the North Gauteng High Court on Thursday dismissed AfriForum’s application to interdict the disconnections.
Eskom said yesterday that the municipalities owed R10.2 billion.
In the last five years, the overdue debt has increased tenfold, with the March 2017 forecast being in excess of R12 billion, Eskom said.
Eskom’s interim chief executive Matshela Koko said on Thursday that, while appropriate legislation allowed Eskom to completely terminate supply to the defaulting municipalities, the power utility had opted for “less invasive” scheduled interruptions for certain hours of the day.
“We did not take this path lightly as a company. We agonised on this matter endlessly.
“Besides the Promotion of Administrative Justice Act (PAJA) process, with which we fully complied, we embarked on a wide community-awareness initiative,” said Koko.
Eskom said it had embarked on various interventions at provincial level with affected municipalities and representatives from the Department of Public Enterprises, National Treasury and the Departments of Co-operative Governance and Traditional Affairs to address the non-payment of the Eskom accounts.
“To entice defaulting municipalities, Eskom offered to suppress future interest on the overdue amounts provided they adhered to the payment plans,” said Koko.
“At an interest rate of prime plus 5 percent, this is a huge incentive and could save the municipalities millions of rand. Sadly, only two of the payment arrangements entered into are still being honoured.”
The Electricity Supply Agreement, the Eskom Distribution Licence Conditions and the Electricity Regulation Act empowered Eskom to disconnect the customers for non-payment after having given the customer 14 days written notice.
Koko said municipalities contributed almost 42percent of Eskom’s total sales and almost 41percent of Eskom’s revenue annually.
“Failure to act renders Eskom in breach of the Public Finance Management Act and its licence conditions, as Eskom is obliged to collect all revenue due and enforce the conditions of the electricity supply agreement with municipalities,” said Koko.
Eskom spokesman Khulu Phasiwe said yesterday that the power utility had given the municipalities until January 16 to make arrangements.
“We had already started discussions with some of them in December. These are likely to resume next week,” said Phasiwe.
Speaking after the court decision, AfriForum’s head of local government Marcus Pawson said yesterday that the organisation was disappointed with the court outcome.
He blamed the municipalities for mismanagement.
“It is sad that ordinary citizens, businesses and hospitals will bear the brunt of municipalities’ failure to pay Eskom. Unfortunately, the court did not see it that way,” said Pawson.
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He stopped short of accusing Eskom of double standards. He said Eskom had not taken a similar stance in relation to the Soweto electricity debt.
Thursday's court decision is a precursor to AfriForum’s other legal challenge of the constitutionality of Eskom’s actions. That matter is scheduled to go to the High Court in March.
“Much of that has been dealt with in the past few days. Given what has been decided, we will have to go back and rethink our approach. We need to look at what has been said,” said Pawson.
He said the municipality debts required a political solution. “It is a political decision that must be taken between two organs of state. For instance, the equitable share allocation from National Treasury could be paid directly to the municipalities. Provinces can also intervene and send an administrator to [struggling] municipalities,” said Pawson.