Eskom rejects Newcastle’s payment offer to keep the city’s lights on

After Eskom presented reasons for why it feels it was improper for the Newcastle Municipality to plead poverty before the high court, Judge P Bezuidenhout decided to reserve judgment in the matter to early next week, reports the Newcastle Advertiser.

The Newcastle municipality has applied to the Pietermaritzburg High Court to interdict Eskom from carrying out power interruptions due to non-payment.

Newcastle municipality offered to pay R20 million to Eskom towards its monthly bill at the high court on Thursday morning – an amount Eskom’s legal representative, Advocate Sydwell Shangisa deemed “unacceptable”, owing to the fact that the municipality’s monthly consumption is about three times that amount.

An offer to increase that amount to R30 million was also rejected by Eskom.

Judge Bezuidenhout expressed concern for the Newcastle community. Addressing Adv Shangisa, Judge Bezuidenhout asked, in the event Eskom were allowed to proceed with disconnections:

“What will happen to the town? What will happen to industry? What will happen to the economy of the country?”

Defending itself from an interim interdict that would prevent Eskom from disconnecting power supply to Newcastle, Adv Shangisa pointed out that, according to its own financial statements, the municipality generates about R600 million per year through providing electricity services.

“Out of this, it generates R200 million profit per annum,” said Adv Shangisa. “The municipality, by its own admission, has a high collection rate of 97% for electricity. Is it then acceptable for them to come before your lordship and plead poverty? There is absolutely no legitimate reason for the municipality to come and plead poverty.”

Quoting section 27(i) of the Electricity Regulations Act (ERA), Adv Shangisa advised the court that the municipality had a statutory and constitutional obligation to ring-fence the revenue it gets for electricity and to use this for the purpose for which it was paid by the ratepayers.

“It is unacceptable that a state organ can come before court and say it collects 97% (for electricity) but uses it for other things,” said Adv Shangisa, calling for the court to compel the municipality to pay over to Eskom what is due.

Adv Shangisa’s interpretation of the NRA was later contested by the legal representatives of the Newcastle Municipality and CoGTA.

Questioned about why it took Eskom so long to act on non-payment, which saw debt escalating to more than R200 million, Adv Shangisa explained that according to the principles of cooperative governance, Eskom had exhausted all other steps before heading to court.

“It is indeed so, that Eskom has been amenable to repayment arrangements, including the acknowledgment of debt. Whenever the municipality defaulted, Eskom would serve the breach letters. There are more than 10 breach letters calling on the municipality to remedy the breach. All previous arrangements were breached by the municipality. Reasonable steps were taken to exhaust all other steps before heading to the court,” he stated.

Adv Shangisa concluded his argument by pointing out that ratepayers residing in other towns were forced to subsidise the cost of Eskom generating power and supplying to Newcastle, when the municipality failed to pay for the service.

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