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Electric lights illuminate a store window at night in Pretoria, South Africa, Wednesday, October 5, 2016. Eskom Holdings SOC Ltd. is building new power stations to end power outages that have lasted for about 100 days. last year, slowing growth in Africa’s most industrialized nation. Photographer: Waldo Swiegers / Bloomberg via Getty Images
With a total outstanding municipal debt of R31 billion, Eskom threatens to cut electricity to a third of the municipalities across the country that have breached their contracts with the power company.
Eskom plans to cut power to a third of the country’s municipalities that have breached the conditions of their supply contract, said Charles Hlebela, a spokesman for South Africa’s National Energy Regulator (NERSA).
“Eskom shared a list of municipalities that it intends to disconnect due to breach of Eskom’s supply contract. NERSA cannot reveal the names of the municipalities but there are about 92 municipalities involved, ”Hlebela said. Daily maverick.
Eskom had not responded to inquiries at the time of publication.
Earlier, Hlebela had told Rapport newspaper that the breach of the contracts of which the municipalities are guilty included defaults and exceeding the maximum agreed electricity demand.
This would not be the first time that the electric company has cut off electricity to those who have not paid. Eskom has disconnected electricity in the Walter Sisulu municipality in the Eastern Cape which, at the end of July, owed Eskom R 1.3 billion.
The outstanding debt of municipalities has been a long-standing problem for Eskom. In December 2019 Eskom saying the Standing Committee of Public Accounts (Scopa) that was owed R26 billion.
Earlier this year, Pravin Gordhan, the Minister of Public Enterprises, saying Parliament that “the total debt owed by the municipalities as of July 31, 2020 is R46.1 billion, of which R31 billion is overdue debt.”
in a statement launched in September, Eskom said “The total outstanding municipal debt of R31 billion at the end of July 2020 continues to threaten Eskom’s sustainability. Municipalities have the responsibility to meet their financial obligations for the supply of electricity in bulk ”.
Gordhan saying Parliament that Eskom had implemented a series of interventions to collect outstanding debt, which included offering payment plans as a means to make repayment of delinquent debt over a period of time more affordable and increasing payment days from 15 to 30 days. for all non-metropolitan municipalities, reducing the default interest rate.
The Amathole Municipality in the Eastern Cape owes Eskom around 1 million rand and the Kwadukuza Municipality in KZN owes the company around 100 million rand.
“Eskom is getting tough on credit control, they have always relaxed allowing this to happen for the last ten years, which is wreaking havoc at Eskom,” said Chris Yelland, energy analyst.
In the past financial year, Eskom had a net loss off R20.5 billion.
Cutting electricity has serious implications because it would mean that essential services like hospitals and fire stations would also be affected. But, Yelland said Eskom would not completely cut power, it would probably cut power during peak hours, “it’s what they euphemistically call load shedding,” Yelland said.
“This will put pressure on municipalities because paying customers will call them and threaten to take legal action. But Eskom’s attitude is that they have a contract with the municipality and if they don’t adhere to the contract, Eskom has every right to disconnect the electricity, ”Yelland said.
A month ago, the South Gauteng Superior Court ruled that Eskom had every right to cut electricity to municipalities that did not pay.
“This strategy is a smart strategy and I don’t think Eskom would consider doing this if they didn’t have the support of the board and the minister. [of Public Entreprises]Yelland said.
In addition to cutting off electricity, Eskom has also used the courts to make non-paying municipalities pay. In September, Eskom insured Municipal farmland valued at R2.5 billion for debt incurred by the local municipality of Matjhabeng in the Free State.
“The municipality has systematically breached its payment obligations and agreements, as well as court orders, causing the debt to increase to R3.4 billion during the period, ”the utility company said of the local Matjhabeng municipality.
According to News 24, Nersa was in the process of establishing courts for each of the municipalities to discuss these issues. DM
