High Court orders Newcastle Municipality to pay R30m a month in Eskom debt

High Court orders Newcastle Municipality to pay R30m a month in Eskom debt

Lennoxton substation. Image: Newcastle Advertiser

Eskom threatened to turn off the municipality’s power supply on Sunday due to the R200m debt it had accumulated over two years.

The power supply for the embattled Newcastle Municipality will stay on for now.

This after a Pietermartizburg High Court judge ordered that a payment plan should begin soon.

Eskom threatened to turn off Newcastle’s power supply on Sunday due to the R200m debt it had accumulated over two years.

The municipality has been instructed to begin paying Eskom R30m on a monthly basis starting this month.

Delivering his decision, Judge Piet Bezuidenhout said the small town relied on the municipality to power households and businesses.

“If the electricity supply is disconnected or disrupted at crucial hours, it would have a catastrophic effect not only on all the residents and business, but on the whole economy of the town.”

He said this would not bring Eskom any closer to recouping funds.

“It would result in the failure of businesses and large factories in the area, causing great job losses in a country where it is common knowledge that the economy is struggling, and high rates of unemployment are found in various areas of the country.”

Last week, the municipality and provincial Department of Cooperative Governance and Traditional Affairs (Cogta) brought an urgent application against Eskom to stop it from disrupting the town’s electricity supply.

Cooperative Governance MEC Sipho Hlomuka welcomed the judgment, saying it “effectively prevented the electricity power supply to the residents and businesses of Newcastle local municipality from being cut off due to debt owed to Eskom.

“Today’s judgment is a welcome relief to the residents and businesses of Newcastle as well as Cogta which had joined the municipality’s bid to prevent the electricity switch-off.”

Hlomuka, however, cautioned that the municipality had to settle its ever-growing debt.

“At the same time, the judgment does not exempt Newcastle from settling its debt with Eskom which is also good news for the power utility,” he said.

Cogta has actively supported the efforts of the municipality to force Eskom to accept its payment plan rather than pull the plug on all consumers and businesses within its jurisdiction. The payment plan was drafted with Cogta’s assistance and is deemed affordable by the department given the municipality’s financial obligations.

“It was absolutely crucial that the power supply to Newcastle should remain uninterrupted as the opposite would have been devastating for the local economy and prospects for future investment. We also believe that the judgment, which forces Newcastle to pay up, is good for the municipality because it imposes a degree of financial responsibility,” said Hlomuka.

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