Municipality doesn’t pay R130m Eskom debt, court clamps down

A court has ordered a serial defaulter municipality in the Eastern Cape – with R130 million Eskom debt – to pay up in a shorter time after defaulting on their payment plan.

This comes after the department of public enterprises last month told parliament municipal debt to Eskom had soared to R28 billion at the end of March.

Eskom’s chief executive officer, Andre de Ruyter, said at the time the top 20 defaulting municipalities were responsible for around 81% of that amount.

“It is common cause that the municipality has in the past acknowledged its indebtedness to Eskom and agreed to a payment plan on more than one occasion,” Judge Gerald Bloem, sitting in the Eastern Cape High Court in Makhanda, said last week.

But, the judge went on, the municipality had “hopelessly failed to honour its obligations in each of those instances”.

He was ruling on a case the Cradock Business Forum (CBF) – together with the Cradock and Middelburg ratepayers’ associations – brought against Eskom and the Inxuba Yethemba municipality last year after the power utility eventually cut off Inxuba’s lights.

In the papers filed last June, CBF chair Charles Featherstonehaugh said they had been forced to turn to the court “as all attempts to secure uninterrupted supply of electricity from either Eskom, or the municipality, have been unsuccessful”.

He said at the time: “The municipality has been a serial defaulter with Eskom for a number of years now. Despite numerous warnings by Eskom to the municipality that Eskom would interrupt the electricity supply, the municipality defaulted again on its last payment plan last month.”

Featherstonehaugh said as a result, Eskom then began interruptions.

“These interruptions had a devastating and irreparable effect on the municipality and those who work and live within boundaries of the municipality.

“The interruptions threaten the very fabric of society. It severely impacts the hospitals in each town, the various public schools, factories, the agricultural college, businesses, and the general manufacturing industry in both towns.

“The interruption also disrupted the water supply to the towns, as the towns rely entirely upon the pumping of water from the reservoirs and dams that supply the municipality, and which needs to be pumped, in bulk.”

During the course of proceedings, the CBF and the ratepayers’ associations, together with the municipality, came up with a payment plan which they wanted made an order of court.

In terms thereof, the municipality would have been directed to pay its debt off in monthly instalments of between R250 000 and R750 000 over a 17-year period. In the end, though, the court set the monthly instalments at R900 000 over a shorter period.

“The municipality’s financial viability is, to say the least, uncertain,” Bloem said in explaining the court’s reasoning.

The judge said in light of that uncertainty, it would be inappropriate to make an order binding the municipality for several years.

“That is sufficient reason for this court to order a payment plan for a shorter period.

“The court can review the efficacy of the payment plan at the end of the shorter period based on evidence that Eskom and the municipality would have placed before it at that stage.”

– bernadettew@citizen.co.za

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