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(Photo by Gallo Images / Foto24 / Herman Verwey)
At the end of July, municipalities across the country owed the South African power company about R31bn. Since then, Eskom has been negotiating the recovery of money from 287 municipalities around the country. The first arrangement has just finished.
Eskom recently secured municipal farmland valued at R2.5 billion for the debt of the local municipality of Matjhabeng, a Sesotho word meaning “where the nations meet.” The council is an administrative area in the Lejweleputswa district of the Free State, which includes the city of Welkom.
The power company said that In its efforts to recover more than R3.4 billion in unpaid debt, the municipality agreed to hand over 139 farms to Eskom as collateral for the debt.
“The property titles of the farms will be backed in favor of Eskom until the debt dispute between Eskom and the municipality is finalized,” said Eskom.
This settlement was made after an order issued by the Free State Division of the Superior Court.
“This step by Eskom is the result of the municipality’s repeated failure to meet its payment obligations to Eskom for the supply of electricity in bulk.”
As part of the agreement, the municipality has withdrawn its request in which it intended to lift the seizure of his bank account by Eskom, which had been granted in early September. Eskom agreed to lift the attachment from the account and it was returned to the municipality. The R2.7 million available in the account remains attached to and in the care of the Court Sheriff.
“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.
Eskom Spokesperson Sikonathi Mantshantsha said Business maverick that the energy provider had been involved in numerous court proceedings since 2014, when the municipality’s outstanding debt amounted to R 372 million, but had been employing other collection mechanisms to recover the funds more recently.
He said Eskom was in various stages of negotiation with municipalities and that each case was handled on its merits. Couldn’t be more specific.
“The total outstanding municipal debt of R31 billion continues to threaten Eskom’s sustainability. Municipalities have the responsibility to meet their financial obligations for the bulk supply of electricity, ”said Eskom.
Meanwhile, Eskom has been granted permission to appeal against orders issued against him by the Vaal River Development Association and the Lekwa Taxpayers Association, following a ruling by the Pretoria High Court in late August 2020 .
The plaintiffs are bodies representing people who live and conduct business in towns of Ngwathe Municipality in the Free State and Lekwa Municipality in Mpumalanga.
Both plaintiffs requested interim orders to oblige Eskom to restore electricity supply to the municipalities to the levels they enjoyed before they were reduced, in accordance with the Maximum Reported Demand Protocol, as provided in the contracts between Eskom and the municipalities. The reductions were made in June / July 2020.
Eskom’s authority to appeal was granted by the high court on September 14, 2020, forwarding the sentencing orders to the Supreme Court of Appeal (SCA).
Eskom noted that the effect of the court order in their favor meant that the Maximum Notified Claim issue was now pending before the SCA.
“Eskom appreciates the Honorable Judge Millar’s decision to grant him permission to appeal to the SCA. The granting of authorization to appeal to the SCA vindicates Eskom’s position that it has always sought to act within the structures of the law ”. BM / DM
