File picture: Sumaya Hisham/Reuters
File picture: Sumaya Hisham/Reuters

Municipalities owe Eskom ’unacceptably, unsustainably’ high R35.3bn

By Loyiso Sidimba Time of article published Sep 3, 2021

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Johannesburg - Municipalities across the country owe Eskom R35.3 billion, and one of the power utility’s biggest defaulters has been slapped with a court order to pay more than R1.35bn plus 2.5% interest for its unserviced debt.

The North Gauteng High Court ordered the troubled eMfuleni local municipality in the Vaal in Gauteng to pay Eskom more than R1.35bn, including 2.5% interest, after the electricity utility sued it.

According to Eskom, the total amount of arrear municipal debt has escalated by R7.3bn to unsustainably high levels and stood at R35.3bn, including interest, by the end of March, compared to R28bn last year.

Eskom lists eMfuleni among the top 10 defaulting municipalities owing it R24bn in arrear debt, or 68% of total arrear municipal debt, as at March 31.

The power utility has stated that there was substantial growth in arrear amounts.

Maluti-a-Phofung in the Free State owes R5.8bn, Emalahleni in Mpumalanga R4.7bn, Matjhabeng, also in the Free State, R3.72bn, Govan Mbeki in Mpumalanga about R2.4bn, and another Free State municipality, Ngwathe, is R1.32bn in arrears.

Lekwa and Thaba Chweu in Mpumalanga owe almost R1.3bn and R840 million, respectively, Ditsobotla in the North West owes R677m, and Modimolle-Mookgophong in Limpopo owes R619m.

Eskom on Thursday disclosed that eMfuleni’s debt was R3.5bn with an additional current account bill of R385m.

In Gauteng, Merafong on the West Rand owes more than R570m, Randwest more than R510m, Tshwane’s debt is R200m, and Ekurhuleni’s is above R8m.

Eskom indicated that Mogale City has signed a payment agreement for its outstanding debt of more than R361m and has been honouring its obligations.

Johannesburg’s City Power, Midvaal and Lesedi are the only Gauteng municipalities paying Eskom on time.

eMfuleni has previously been ordered to pay Eskom R615m, which the power utility said kept compounding because of its poor servicing of its electricity account.

On August 21, North Gauteng Acting Judge LI Vorster ordered eMfuleni to pay R1 326 797 399.75 at the prevailing prime overdraft rate of 2.5% calculated from October 2019, in one of Eskom’s two claims.

Acting Judge Vorster also ordered the municipality to pay R25m at 2.5% interest.

He found that eMfuleni’s defence that the action instituted by Eskom was premature for want of compliance with the Constitution could not be upheld.

In 2018, Eskom cut the supply of bulk electricity to eMfuleni because of its escalating debt and its failure honour its obligations in relation to the payment for electricity, according to the judgment.

In Eskom’s 2021 annual report, Eskom’s interim chairperson, Professor Malegapuru Makgoba, said there were continuous engagements among the government and various stakeholders to find a sustainable solution to the perennial problem of municipal debt owed to the power utility.

“Instead of primarily turning to the courts, collaborative discussions have taken place between various stakeholders in recent months. An active partnering model is being implemented in struggling municipalities to assist local authorities, with Eskom stepping in to maintain and operate municipal distribution systems,” Makgoba said.

Eskom chief financial officer Calib Cassim said despite its best efforts, limited success has been achieved in managing municipal arrear debt, which continued to escalate to unacceptably high levels, increasing by 26% to R35.3bn this year.

“Unfortunately, the arrear debt challenge cannot be solved by Eskom alone. A structural solution is required, along with continued support and co-operation from the government and other stakeholders, to address the root causes of the problem and resolve the challenges,” Cassim said.

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Political Bureau

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