Municipalities forced to accept defeat in court battle over electricity debt
“For Eskom to survive another 99 years and more, a high sense of responsibility and commitment is needed by all.”
In two separate judgments delivered this week, municipalities were forced to face the fact that they are legally obliged to honour their payment obligations toward Eskom. In both cases – respectively relating to the City of Matlosana Local Municipality in the North West and the Letsemeng Local Municipality in the Free State – the municipalities’ applications were dismissed with costs.
According to Agnes Mlambo, General Manager of Eskom’s CentralEast Cluster (Free State and KwaZulu-Natal), it is incredible that some municipalities are willing to spend millions on legal costs instead of using the funds to pay for electricity services delivered by Eskom. “This proves the unwillingness of these municipalities to do the right thing, which is to fulfil their legal duties by paying Eskom for electricity supplied. These municipalities collect revenue from electricity sales at a mark-up from their customers, but do not pass the revenue on to Eskom,” adds Mlambo. “In the meantime, Eskom must cover the costs of diesel, coal, salaries and other expenses to keep supplying electricity to these non-paying municipalities.”
These judgments conclude lengthy legal battles that started in 2020 when Eskom served the municipalities notices to interrupt electricity services due to non-payment of electricity accounts. Both judgments are unambiguous on the obligation of the municipalities to service their Eskom current accounts and pay arrear debt.
Since the start of the legal proceedings, these municipalities have been taking payment holidays. In January 2020, Letsemeng’s arrear debt totalled R41,1 million. Two and a half years later, the Municipality’s overdue debt has risen to R119,7 million and it is faced with paying the legal costs of both parties. Similar to Letsemeng, Matlosana’s arear debt stood at R422,4 million in January 2020 and has now reached a staggering R1,054 million.
According to Marion Hughes, General Manager of Eskom Gemma Cluster (Northern Cape and North West), payment for services is imperative for institutions to be sustainable. “We should not have to use extraordinary measures, like the courts, in order to receive payment for services rendered,” says Hughes.
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