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Eskom forced to provide service to defaulting company

The Gauteng High Court, Johannesburg, has forced Eskom to provide services to Broadband Infraco, which is failing to pay for those services. Picture: Siphiwe Sibeko

The Gauteng High Court, Johannesburg, has forced Eskom to provide services to Broadband Infraco, which is failing to pay for those services. Picture: Siphiwe Sibeko

Published Aug 13, 2023


THE Gauteng High Court, Johannesburg, has ruled against Eskom’s decision to terminate its services to financially struggling Broadband Infraco (BBI) despite its failure to pay its debt of millions of rand to the power utility.

The court issued the urgent interdict on Monday in response to the June 23 application by BBI – whose services to its customers locally and in neighbouring countries had been impacted by load shedding – opposing Eskom’s disconnection all its fibre optic cables. BBI was using these to provide a telecommunication network for the benefit of rural communities.

“The respondent (Eskom) is directed within 10 days of this order to reconnect all the disconnected optic fibres it leased to the respondent in terms of the lease agreement concluded between the parties on or about 16 October 2019 and provide the lease services in accordance with the terms of the lease agreement,” Acting Judge WJ du Plessis’s judgment read.

It remained unclear how much BBI owes Eskom as both Eskom acting spokesperson Daphne Mokwena and BBI did not respond to questions sent to them.

According to the judgment papers, BBI deploys a long-distance telecommunications network of about 15 000km of fibre optic cables spread across the country and neighbouring states. Those cables are owned by Eskom, which leased and maintained them.

“Only Eskom can provide these crucial services to enable BBI to comply with its statutory obligations.

“Eskom provided these services previously in terms of a written lease agreement and a written maintenance agreement but stopped providing them when BBI fell into arrears, unable to settle its debts,” read the judgment.

Like Eskom and many state-owned companies, BBI, which operates as the Communications and Digital Technologies Department's entity, has been reportedly struggling to manage its finances and is unable to service its creditors and deliver on its obligations.

IOL reported in February that Communications and Digital Technologies Deputy Minister Philly Mapulane was worried that the entity’s low cash flow was affecting its financial viability.

According to the judgment, Eskom and BBI had several lease agreements with one of them due to expire in August 2024, but Eskom disconnected the fibres optic cables it leased between September and October last year.

The power utility also refused to renew the maintenance agreement after it had expired on October 31, 2021, demanding that BBI pay its outstanding debts.

But BBI refused or avoided settling the dispute, “often by engaging informally”.

“Throughout, BBI avers, Eskom remained rigid and never formally declared an intergovernmental dispute to initiate the dispute resolution process as per Irfa (Intergovernmental Relations Framework Act).

“Ultimately, on 29 March 2023, Eskom launched an action to recover the debts owed by BBI, and this is in violation of Irfa, BBI argues,” read the judgment.

In its application for the interdict, BBC argued that Eskom had violated the part of the Intergovernmental Dispute Prevention and Settlement Practice Guide, which was promulgated in terms of the Intergovernmental Relations Framework Act.

BBI sought an order directing Eskom to stop terminating the services pending the finalisation of both parties’ intergovernmental dispute resolution process.

BBI accepted that it owed Eskom and there was an engagement to find a solution.

However, BBI approached the court for the “semi-urgent” interdict after the Eskom’s decision to institute action on March 29 to recover the debts while BBI was still trying to comply with its obligations under the act.

BBI argued that Eskom had failed to exhaust the constitutionally and statutorily mandated dispute resolution mechanism applicable to organs of state as laid out in the act.

The company argued that Eskom should have declared an intergovernmental dispute and engaged in the dispute resolution process.

“Instead, Eskom took coercive action by stating that it would not provide the maintenance and lease services unless BBI paid its historic debts in full.

“When BBI did not do so (pay), they terminated the lease agreement, disconnected the leased optic fibre lines, and instituted an action to recover the debts.

“BBI contends that these decisions were unlawful and that they (BBI) are entitled to have them reviewed and set aside,” said Judge Du Plessis.

The judge accepted BBI’s argument and granted an interim interdict against Eskom.

“I am satisfied that BBI meets the requirements for an interim interdict, having established a prima facie right that the decisions are judicially renewable and that they have prospects of success in having them set aside on the basis that they undermine constitutional and statutory imperatives as laid out in Irfa.”

He said Eskom “is directed to resume providing the services contemplated by the maintenance agreement concluded between the parties on May 10, 2018”.

The judge also ordered Eskom to pay costs for the application.

It seems there is no love lost between the parties as BBI’s 2022 Integrated Report indicated how the company’s performance suffered as a result of load shedding, which forced it to purchase batteries to run its communication network.

“A national shortage of batteries since 2021 caused long delivery times by suppliers and have put sites at risk to be isolated during power supply outages, which impacted negatively on customer service availability.

“This national shortage was caused by large telecommunication companies purchasing all available stock (batteries) from suppliers to counter the impact of Stages 3 and 4 load shedding, as well as to plan for any possible blackout periods,” read the BBI report.

BBI also supplies telecommunication networks to Mozambique, Namibia, Zimbabwe, Swaziland, Botswana and Lesotho.

“The Swaziland cross-border route was affected by power outages caused by Eskom load shedding and a truck accident that damaged municipal overhead infrastructure.

“The Lesotho cross-border route was impacted twice during October 2021, due to vandalism of the railway infrastructure between Bloemfontein and Vaalkraal, as well as a network failure during February 2022 on Eskom infrastructure that caused the longest downtime on this route,” read the report.