Eskom, Newcastle municipality finally make peace, at taxpayers’ expense

Eskom and Newcastle Municipality seem to have made peace, but there is one thorny matter yet to be resolved – who is going to pay the steep costs incurred by this high court civil litigation?

In order make this decision, Judge Elsa Bezuidenhout is likely to consider who is to blame for Newcastle’s escalating Eskom debt landing in court, when all the parties involved ended up resolving the matter among themselves eventually, reports Newcastle Advertiser.

There is no need for Newcastle’s ratepayers to ponder the question too deeply, since they will be footing the municipality’s bill anyway. Advocate Joseph Nxusani informed Judge Bezuidenhout on Wednesday that Newcastle Municipality and Eskom have agreed to each pay its own legal costs.

After all, it was Newcastle Municipality that took Eskom to court in a desperate bid to stop the energy provider from switching off power due to the non-payment of more than R200 million debt. Furthermore, it is considered unbecoming of one state organ to claim its legal costs against another.

ALSO READ: Newcastle owes Eskom millions, but has never been load-shed

“Sanity prevailed and we all lived happily ever after… The state organs which were at each other’s throats have since made up. At least Eskom and the municipality are on the best of terms as far as the order is concerned,” stated Eskom’s legal representative, Advocate Sidwell Shangisa, referring to the settlement agreement, which was made an order of the court.

“To the credit of the municipality, we have settled our dispute,” Shangisa told the court. “There is no longer a rift between us and the municipality. It has acted, in that regard, quite responsibly.”

The question of who should be held liable for the legal fees racked up by the department of cooperative governance and traditional affairs (Cogta) and Lanxess, a Newcastle-based business specialising in chrome products, however, led to a two-hour long war of words. Both Lanxess and Cogta intend to claim legal costs from Eskom, while Eskom tore into Cogta saying its “obstructionist attitude” is “part of the problem”, before roasting Lanxess for “taking hands” with a delinquent municipality instead of rebuking the municipality for failing Newcastle’s ratepayers.

Perhaps Shangisa summarised it best: “No one emerges with clean hands in this mess… There are no winners here… The loser can only be the taxpayer.”

The dispute between Eskom and Newcastle Municipality was settled on December 11 via a settlement agreement, which Judge Bezuidenhout made an order of the court. The order stipulates that Newcastle is to pay Eskom its monthly current account, and Eskom is not to interrupt power supply to the town, provided the municipality keeps its current account up to date.

If the municipality fails to do so, Eskom may disconnect power supply, but only after it has complied with the Promotion of Administrative Justice Act, a law which ensures administrative action is carried out in a manner that is reasonable and fair. The order further compels Newcastle Municipality, Eskom, and Cogta to engage in constructive negotiations, for the payment of Newcastle’s outstanding debt, within the next three months.

“We trust that there shall be no more litigation. The municipality will comply with its contractual obligations and pay Eskom and there will be no need for Eskom to resort to any interruptions in the supply of electricity,” said Shangisa.

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