Municipalities about to be cut off owe Eskom R10.2 billion

Eskom says that municipalities in the Free State and the North West Province owe it over R10.2 billion – and need to pay up before the 16th of January or they will be cut off.

On Thursday, the North Gauteng High Court dismissed an urgent case brought by AfriForum, seeking to block Eskom from cutting power to eight municipalities in the provinces on the planned date of 5 January.

According to AfriForum, the power cuts would be unfair to residents in the affected municipalities who had paid their accounts – however, the court ruled that the municipalities needed to be held accountable for the outstanding debt, and that Eskom was within its legal rights to shut off power.

According to Eskom, the utility has been engaging with the municipalities since 2011 to claw back the money owed to it, with the overdue debt increasing ten-fold over the past 5 years to R10.2 billion.

The amount owed was only R6 billion eight months ago, and by March 2017, the debt would total R12 billion, Eskom said.

“It is imperative for Eskom to collect its revenues or else the entity will not be sustainable. Municipalities contribute almost 42% of Eskom’s total sales and almost 41% of Eskom’s revenue annually – so non-payment of accounts has a significant impact on Eskom’s cashflow,” the group said.

Eskom noted that while legislation allows it to completely terminate supply to the defaulting municipalities, the group has opted for a less invasive approach of scheduled interruptions for certain hours of the day.

“To entice defaulting municipalities, Eskom offered to suppress future interest on the overdue amounts provided they adhered to the payment plans. At an interest rate of prime plus 5% this is a huge incentive and could save the municipalities millions of rand. Sadly, only two of the payment arrangements entered into are still being honoured,” Eskom said.

The power utility will now move ahead with the scheduled cut-offs, giving the affected municipalities until 16 January to pay up.

It encouraged residents who felt that they were unfairly impacted by the decision to approach their municipalities or the courts, to hold them accountable for the situation.

Read: Court gives Eskom the go-ahead to cut off power to indebted municipalities

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Municipalities about to be cut off owe Eskom R10.2 billion