Tshwane electricity debt lands them in court

The Tshwane metro continues to be at loggerheads with power utility Eskom over a staggering R6.6-billion debt.

According to the metro, it owed Eskom R6.6-billion on August 31 and the debt consisted of R4.5-billion historical and R2.1-billion current debt, according to the August invoice.

This matter between Tshwane and Eskom has been in litigation and the next hearing is set for late November.

Eskom spokesperson Amanda Qithi said the bill for September was not settled by the due date and the city has been making irregular payments.

Though the metro has experienced financial difficulty, it paid its invoices in full in winter when Eskom bills at a significantly higher rate than in other seasons.

Qithi said Tshwane had accumulated arrears of R5.2-billion as of the end of August, and the two parties are currently in litigation.

“The power utility could not reach a payment agreement with Tshwane,” she said.

Metro spokesperson Lindela Mashigo said the litigation started in the Gauteng North High Court on July 17.

“Due to the lengthy period that had to be allocated for a full hearing, the presiding judge ordered a postponement to October.”

He said however, at the request of the North Gauteng High Court Deputy Judge President (DJP), counsel for Eskom and the city were instructed to prepare for a full hearing set for November 26 and 27.

Mashigo said the metro is committed to fulfilling its financial obligations and maintaining a good standing with Eskom.

“The Tshwane metro plans to comply with the Gauteng North High Court ruling, due to be announced following the hearing,” he said.

Mashigo added that the metro is doing its best to adhere to an Eskom demand for the city to pay its current account in full and on time.

“Hence, Tshwane paid in full Eskom’s May and June invoices and remains with only R521-million from the July invoice, which amounted to R2.2-billion.”

Despite the city’s previous strides towards financial redemption, political turmoil has thrown a wrench into the works, jeopardising the previous efforts to repair Tshwane’s financial standing.

The recent ousting of DA mayor Cilliers Brink, coupled with the unaudited financial statements that hint at a faint glimmer of hope, suggest that the future of the city’s economic rehabilitation remains an uncertain journey.

Brink was ousted by his third motion of no confidence on September 26, the two previous motions, in July and August, were withdrawn before voting for procedural and legal reasons.

ANC councillor Frans Boshielo said the motion was being brought due to the metro’s debt of R6-billion to Eskom and R15-million to Rand Water, delayed pension fund payments, unnecessary expenditure on new appointments, and a late submission of five quarterly audit performance committee reports.

The then MMC for Finance Jacqui Uys had said in September that in the 2023/2024 financial year that ended on June 30, the unaudited financial statements showed a significant improvement.

The previous mayor had said on the current trajectory, the metro would be cash-positive by the end of the next financial year and this would allow it to clear its debt to Eskom in the medium term, restoring the city’s bankability and ability to fund service infrastructure.

In April this year, the city submitted a payment plan to Eskom and, though it has not been accepted, the metro said it has kept to it and exceeded its payment commitments.

Mashigo added that Tshwane paid Eskom’s May and June invoices in full and will endeavour to pay in full all its future current account invoices whilst, on the other hand, it continues to pay off the accumulated arrear debt.

According to Mashigo, the electricity bill for the past four winter months was R7.2-billion.

“R1-billion was for May, R1.9-billion accumulated in June, then R2.2-billion in July, and R2.1-billion August with at least R4.6-billion paid to Eskom in those four winter months.”

According to Mashigo, the city has had continuous engagements with Eskom pertaining to invoices but such engagements have resulted in an impasse. Hence, the matter is now in the court for arbitration.

He said the city has implemented a Financial Recovery Plan (FRP) to improve its financial position in the short to medium terms.

“The plan aims to interrogate the entire value chain of Tshwane’s municipal operations and its primary objective is to ensure that Tshwane bills and collects all revenues due to it. This includes investigating new sources of revenue, managing expenditures to be within allowable and available limits, to ensure that the metro’s service delivery model is integrated, effective and efficient.”

He said the FRP is not a stand-alone element but at the core of the metro’s business in every department, part of the budget process, and takes cognisance of all other measures put in place to ensure financial recovery.

“The FRP is part of the National and Provincial spheres of Government’s support strategy to ensure that the city of Tshwane recovers financially, resulting in an effective and efficient municipality that is financially stable and able to provide services to the community on a sustainable basis.”

The metro previously stated that managing expenses downward and revenue upward was part of the plan.

The metro has been chasing after defaulting customers hence the collective debt by the top 500 highest debtors fell from R5.3 billion in April to R4.4 billion by August.

Particularly notable is the reduction of business debt, where 303 business accounts’ debt decreased from R3.3-billion to R2.5-billion on average.

Mashigo said it should be noted that Tshwane Ya Tima, a revenue collection campaign that disconnects defaulting clients from the supply grid, is one of the metro’s credit control measures.

“This means that the Tshwane Ya Tima revenue collection campaign is among the credit control campaign vehicles that the city implemented to increase the needed revenue so that the municipality can deliver on its local government mandate of delivering quality local services to all its residents.”

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