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Eskom takes City Power to court over ‘unprecedented’ R1bn debt
Eskom takes legal action against City Power's escalating debt, exceeding R1 billion, citing financial strain and rising demand.
Picture: Roodepoort Record
Eskom is taking Johannesburg’s power utility City Power to court over a debt of over R1 billion.
The power utility said that City Power’s escalating debt, which is R1,073 billion as of 31 March, left Eskom no choice but to apply to the Johannesburg High Court for a declaratory order to force City Power to pay what is due.
The case is set to take place on 4 June.
No payment received for March 2024 invoice
“The power utility started to default on its payments on October 2023 and no payment was received for the March 2024 invoice,” Eskom said in a statement on Monday.
The power utility said the debt owed by City Power has reached “unprecedented levels, exacerbating Eskom’s already strained financial situation”.
Eskom added that the circumstances jeopardise its capacity to satisfy Gauteng’s increasing demand, maintain vital infrastructure, and make investments in new technologies.
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“Over and above, City Power declared a dispute regarding potential overbilling on bulk purchase invoices dating back to 2021. Eskom denies the claims made by City Power and will prove its position through the arbitration process,” the power utility said.
Despite dispute, municipality must still pay
According to the electricity supply agreements sanctioned by the Electricity Regulation Act of 20-6, if a municipality raises a dispute with Eskom, it must still pay.
“The dispute does not absolve it of its legal obligations to pay Eskom for the bulk electricity it has received,” Eskom said.
The power utility added that it is still dedicated to carrying out its responsibility to provide “reliable and sustainable” electricity in order to support Gauteng’s economic growth and establish the province as a top investment destination.
Municipal debt owed to Eskom
In November last year, Eskom said that over the years, arrears debt, particularly municipal debt, had grown to unsustainable levels.
According to it, as of the end of March 2023, arrears in municipal debt were at R58.5 billion, a substantial 30% year-on-year increase from R44.7 billion in March 2022.
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“The top 20 defaulting municipalities account for about 78% of total arrears in municipal debt. Eskom continues to make efforts to address the arrears debt; however, these have not yielded the desired outcome as the debt continued to escalate,” Eskom said.
