Cash-strapped Emfuleni Municipality gets debt relief from Eskom

Eskom has announced that it will take over the functions and services relating to the supply of electricity at the cash-strapped Emfuleni Local Municipality.

The power utility on Thursday said it had officially signed the distribution agency agreement with the municipality, as instructed by a Pretoria high court order of July 5 2023.

The order stated that Eskom shall be entitled to collect all revenues due to Emfuleni in respect of the electricity distribution and ensure that the funds were paid into a separate ring-fenced account to be opened in the name of the municipality.

Service delivery agent

Eskom Gauteng spokesperson Amanda Qithi said the court ordered that the Emfuleni Local Municipality must appoint Eskom as its service delivery agent.

“Eskom and Emfuleni Local Municipality have also reached an agreement relating to the attachment of the bank accounts and to ensure that the municipality is able to pay salaries to its employees.

“This follows the successful attachment of Emfuleni’s four bank accounts on 11 September 2024 by the Sheriff of the High Court on the instruction by Eskom to enforce the court order obtained against the municipality for non-payment of the bulk electricity account,” Qithi said.

Qithi said Eskom and the Emfuleni Municipality are “committed to work closely together” to ensure a smooth transition.

“The municipality has committed to cooperate with Eskom and comply with the Distribution Agency Agreement.”

ALSO READ: Eskom attaches debt-ridden Emfuleni’s bank accounts to recover R8bn

Emfuleni debt

Last month, Eskom said the R8 billion owed to Eskom by Emfuleni for bulk electricity represented about 10% of the total R82bn owed by municipalities and places Emfuleni among the top three municipalities in debt to Eskom.

Eskom spokesperson Daphne Mokwena at the time said the Emfuleni municipality failed to comply with the requirements of the National Treasury debt relief programme.

She said Eskom cannot financially sustain the electricity debt of the municipality without severely impacting its own operations and the citizens of the country.

“The municipality’s failure to pay for bulk electricity compromises Eskom’s financial stability and its ability to provide affordable electricity.”

Mokwena added that municipal debt remains one of Eskom’s biggest challenges.

ALSO READ: Six in court for R400 million tender fraud at Eskom and Sasol