Court ruling on Emfuleni and Eskom a sign that municipalities unable to deliver services

After years of battles between the struggling Emfuleni Local Municipality and Eskom, a recent court ruling ordered the power utility to take over the distribution of electricity.

This comes in the wake of a debt dispute between Emfuleni and Eskom, where the latter had taken the municipality to court on several occasions.

Three hours from Emfuleni’s Vanderbijlpark offices, another troubled municipality – Maluti a Phofung – earlier this year entered into an agreement with Eskom, allowing the power utility to distribute electricity directly to residents.

The issue of where the responsibility of electricity supply to residents should lie is a complex one, according to Good Governance Africa (GGA).

The troubled municipality has in recent years also had its assets attached in a bid to recover money owed to Eskom but that did not make any difference as the debt to Eskom has just ballooned.

According to Pranish Desai from GGA, with the massive debt that many municipalities owe Eskom, the recent high court ruling ordering Eskom to take over the distribution of electricity in Emfuleni is understandable, especially given how important the provision of electricity is for ordinary households.

The Pretoria High Court last week also gave the municipality six months to draw up a new settlement plan to pay off its R3.5 billion debt to Eskom.

However, Desai said arrangements of this nature raise questions about democratic accountability.

“The provision of electricity directly to households is meant to be a key responsibility of local councils – who residents elect.

“By moving this responsibility entirely to Eskom – who voters do not elect – this removes direct accountability to voters for electricity provision from the equation,” said Desai.

What these court rulings mean

“This ruling illustrates that many municipalities lack the capacity to adequately deliver on their existing mandate without support, a major concern for the sustainability of our current system of local government,” Desai added.

Meanwhile a relief order was sought for the municipality to be declared in contempt of the full court’s order issued on 18 November 2018.

The relief obtained was primarily that the applicants pay Eskom’s portion of the electricity bills, issued by Emfuleni to its residents, directly to Eskom.

Eskom’s complaint at the time was that it is unable to discharge its constitutional obligations to generate and supply bulk electricity to Emfuleni because of the ever-escalating debt owed to it due to non-payment for bulk electricity by Emfuleni.

ALSO READ: Emfuleni’s vehicles seized to help pay Eskom debt

Local businesses, including the non-government organisation Emfuleni For Change, were the intervening parties in the matter.

The court, in its judgment handed down last week, also authorised the applicants who are large power users to pay what they owed to Emfuleni directly to Eskom.

The authorisation was made to curb Emfuleni’s debt from spiralling.

Court findings:

• The court also found that the debt of Emfuleni is rising despite Emfuleni’s electricity customers paying for electricity;
• It said the payments which Emfuleni pays in respect of the Eskom debt have proved to be the proverbial drop in the ocean and have made no visible dent in massive debt over time and that this has occurred despite investigations showing that Emfuleni collects about 90% of the charges it raises.

ALSO READ: Municipality collected 90% of electricity bills but failed to pay Eskom

Ratepayers association welcomes court ruling

An organisations that has been at loggerheads with the municipality for years, the Emfuleni Ratepayers Association, said a lot still needs to be done to bring into effect the new arrangement with Eskom as per the court’s ruling.

“There is a six month period where technical aspects, such as invoicing and network maintenance among many others, need to be sorted out between all parties concerned.

“The latest court ruling is going to affect all electricity consumers including big businesses and residents,” Chairperson for the Emfuleni Ratepayers Association Kobus Janse Van Rensberg told The Citizen.

Emfuleni dispels claims of 90% electricity bills collection

Emfuleni spokesperson Makhosonke Sangweni has disputed reports that the municipality has collected 90% of its electricity bills.

“The electricity collection rate of the municipality is at 76% for the 2022/23 financial year excluding the R1.5 billion losses in key basic services deliverables and according to Statistics South Africa (Stats SA), 58% of household customers serviced by the municipality are indigents and this makes revenue collection from these households nearly impossible.

“Unemployment in our region is above 50% and this qualifies it as a crisis strongly felt by the municipality when it comes to delivering services,” Sangweni said.

He said the municipality has been on record with its Eskom account payment challenges, ballooning debt and municipal account attachment threats by the power utility.

“Since the first high court order was issued on 18 November 2018, the municipality has been struggling to keep up with payments due to the unshakable historical debt owed to Eskom.”

He also said that Emfuleni has been paying money towards the Eskom current account, based on affordability, however this has barely made a dent to the overall debt owed due to interest. 

“The current high court order ruling of the battle between Emfuleni and Eskom is superseded by the National Treasury resolution issued in terms of circular 124 of Municipal Finance Management Act (MFMA), which grants debt relief for municipalities that owe Eskom as of the 31 March 2023. 

“The municipality applied for the debt relief on 31 May 2023 and the application was approved with effect from 1 June 2023 and the approval is subject to compliance with all conditions of municipal debt relief as contained in the MFMA circular for a period of 36 months,” Sangweni added.

Eskom spokesperson in Gauteng Amanda Qithi did not comment on the latest ruling, saying they are still studying it.