Durban - The KwaZulu-Natal provincial Treasury is in the dark about threats made by the Ulundi Municipality to take legal action against power utility, Eskom, to recoup R101 million owed to it.
“Ulundi Municipality has not alerted provincial Treasury of its planned move to take legal action, as there are still matters to be finalised,” the department said on Thursday.
Provincial Treasury also said it was committed to assisting the two institutions in settling their dispute.
The department made the comments when responding to a report in the Daily News this week that the municipality and Eskom were embroiled in a row over outstanding debts, with each claiming the other owes it millions of rand.
Ulundi was in arrears to the tune of R41m for electricity bought from Eskom while the municipality claims the power utility owes it R41m for using its infrastructure to distribute electricity.
The dispute was thrust into the limelight when Finance MEC Belinda Scott, tabled a report to the legislature last week, showing the state of finances of municipalities in the province.
Scott had informed the legislature that her department had established a task team to provide support to the municipality, which had apparently defaulted on its repayment plan in June, July and September last year.
Following an intervention by the provincial Treasury, a repayment plan had been reached whereby Eskom would stop charging interest on Ulundi’s debt and the Treasury was monitoring repayments.
But, Ulundi Municipality has since claimed it had been trying for years to recover money owed to it by Eskom and that it was considering taking legal action.
The Treasury explained that its involvement in council’s debt arose from the Municipal Finance Management Act, which obliged it to follow up with a municipality in arrears, which had not concluded payment arrangement plans.
This, according to provincial Treasury, was to “facilitate conclusion of realistic or achievable payment arrangement plans and monitor pro-gress”.
Treasury was also empowered by a section of the Municipal Finance Management Act to mediate where a financial dispute included a municipality. “Provincial Treasury is part of the task team which includes Cogta (Co-operative Governance and Traditional Affairs), Eskom, Ulundi Municipality and Salga (South African Local Government Association) to ensure the financial dispute between Eskom and Ulundi Municipality is ami-cably resolved and the debt is settled by either party as determined.”
The department said it was aware of the claim that Eskom owed Ulundi money.
“Through various engagements of the task team, it was noted that Eskom and Ulundi Municipality did not review the wheeling agreement since inception. So the task team has had to determine the amounts Eskom has to pay back to Ulundi Municipality.”
It also said the R101m the municipality claimed it was owed by Eskom was among the things the task team was looking into in an effort to resolve the dispute.
Daily News