Treasury approves almost R6 billion Eskom debt relief for ELM

The Treasury agreement seems to deflect or redirect all other agreements and court orders with and against ELM that Eskom may have gained – including a Johannesburg High Court judgement last week allowing some Emfuleni power users to bypass the municipality and pay Eskom directly.

South Africa’s National Treasury has approved a debt relief package for ELM on its almost R6 billion debt to Eskom after the embattled Gauteng municipality applied for it at the end of May.

This emerged from National Treasury documentation in Vaalweekblad’s possession – dated 30 June 2023.

National Treasury noted ELM’s debt to Eskom as of 31 March 2023 stood at R5 913 358 188 00.

Furthermore, according to the agreement, any existing payment arrangements between ELM and Eskom are terminated.

No comment was yet forthcoming from ELM at the time of publication but it has prepreviously confirmed that it applied for the debt relief.

In a massive win for ELM, Eskom must now suppress any interest in the municipality’s arrears retrospectively from 1 April 2023, putting up to R40 to R50 million back into ELM coffers monthly.

“If Eskom…already obtained an order of court for direct payment prior to the effective date, Eskom to fully cease enforcing any such order of court parallel to Eskom writing off the last third of the municipality’s debt relief for 36 consecutive months, from the effective date for the duration of debt relief,” states the agreement.

Other court orders relating to ELM arrears as at 31 March 2023 to be agreed on in writing between National Treasury and , the agreement stipulates.

A stay of legal proceedings and court orders by Eskom towards ELM is thus now officially in place, says the Treasury documentation.

This also means that a series of bank attachments on ELM accounts – which have severely hindered municipal salary payments for months since December 2022 – are likely to be removed by Eskom.

ELM applied for the debt relief package on May 31 and last week National Treasury informed ELM that it met the minimum requirements for approval.

The relief package is deemed to have taken effect from 1 June 2023, according to documentation .

ELM must now comply with all the provisions of the Treasury agreement for a period of 36 months.

National treasury also applauded ELM for showing its commitment to enforcing basic best practice financial management  by applying for the Eskom debt relief.

But ELM must still satisfy other stringent conditions for the agreement to kick in fully, including an implementation monitoring plan and beefing up its indigent programme information.