No breakfast and no dinner. That is the reality as Eskom is gearing up to flick the switch next week.
The power utility is going ahead with its decision to disconnect Emalahleni Local Municipality.
Eskom is showing no mercy and will discontinue electricity in all four of the inlets and that means that the entire municipality will be without electricity on Mondays to Fridays from 06:00 to 08:00 and 17:00 to 19:30 and on Saturdays and Sundays from 08:30 to 11:00 and 15:00 and 17:30 until further notice.
Apart from essential services like hospitals that will also be affected, this will have a negative impact on water supply. Water pumps will stop pumping water and residents will have to go without it as is takes a long time to fill reservoirs after any disruption.
During a briefing with business owners on Friday, January 13 Mr Theo van Vuuren, municipal manager, explained how the municipality found themselves in this financial mess.
He said eMalahleni is a high energy consuming municipal area, the highest in the province, and its costs to purchase electricity and maintain the network is far higher than the income it receives from customers. As a result since 2011 the municipal account to Eskom has constantly remained under pressure and the remedies to put this account in balance have lagged behind the growth in demand.
Mr Theo van Vuuren addressing the business community on Friday, January 13.
In May 2016 an agreement was reached between the two parties. It was agreed upon that the arrears amount of R548-million with interest cap will be paid back by April 2018.
But then winter came and the scale started to tumble.
Where the municipality charge a fixed tariff Eskom tariffs exponentially increase with volume used. Therefore in winter and high demand periods the municipality was unable to recover from its customers the full accounts as received from Eskom. This difference in winter is as high as 60%.
To add to the struggle to keep up, where the municipality allows a 60 day payment period at a fixed rate, notwithstanding the volume of electricity used, to its communities, Eskom only allows 14 days where after interest of 15% is levied. This interest is capitalised and therefore the municipality is paying interest on interest. More than 40% of the outstanding account to Eskom originated from interest charges.
Another factor playing a huge role is the Eskom tariffs approved by the National Energy Regulator that constantly has been higher than what the municipality was allowed to approve. Eskom tariffs increased with more than 70% over the past few years whilst the municipal tariffs on average with 10% per annum.
A number of other factors like the very old infrastructure, the high cost of maintenance thereof, illegal connections and corruption also played its part in this financial jumble.
On Tuesday, January 17 Van Vuuren gave a proposal to Eskom that has been finalised based on interactions with them and key to this proposal was the further payment of R40-million by the beginning of the week.
Van Vuuren urged the business community to pay their accounts. He mentioned that the business sector owe the municipality in the region of R264-million on arrear accounts.
Despite various initiatives consumers are also reluctant to pay their service bills which are R2.2-million in arrears.
Several initiatives were rolled out to try and get consumers and business owners to own up to their debt. Some were successful, while others like the removal of illegal connections were met with hostility.
The council again urges residents to ensure that their municipal accounts are paid in full to avoid being cut off and penalised. In trying to encourage customers to bring arrear accounts in good standing, council has in terms of the credit policy, decided to enforce the following incentives: apply a 10% discount on current account payments if accounts are paid in full on or before the third of the month; on arrears of shorter than 90 days, waive interest plus 10% of the capital amount; on arrears of between 90 and 180 days waive interest plus 50% of capital; on arrears of older than 180 days waive interest plus 50% of capital; on partial payments of above 50% will only be considered for waiving of interest.
The capital discount is capped at R50 000, except in exceptional cases which further discounts can be negotiated.
These incentives are applicable from January 16 until March 31.
“Should customers not have made arrangements by the March 31 2017 or have settled their accounts in full, those customers will be cut off and defaulters blacklisted,” Van Vuuren said.
The amount owed by defaulting municipalities rose to R10.2-billion from R6-billion six months ago. In the last five years, the overdue debt has increased tenfold with the March forecast being in excess of R12-billion.
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