The South African Local Government Association (Salga) says power utility Eskom has no authority to act as a collection agency for municipalities to recover money owed by clients.
“Salga would like to put on record that Eskom does not have the authority to act as a collection agent on behalf of any municipality,” spokesperson Tahir Sema said.
“Municipalities have executive authority for the distribution of electricity to end users in their area of their jurisdiction. No government department, utility or any other entity can arbitrarily intervene in the right of municipalities to collect their own revenue.”
Sema said on Thursday, Eskom’s group executive for Customer Services Ayanda Noah made an announcement at a briefing in Cape Town on the state of the electricity system that Eskom is going ahead with plans to act as “a collection agent to 42 errant municipalities”.
He said the announcement was undermining a Memorandum of Understanding which was signed by the two parties in 2014.
“The purpose of the MOU is to bring about the long term sustainability of electricity reticulation. It commits both parties to work cooperatively and collaboratively to resolve various industry and operational challenges including credit control, debt and revenue management,” said Sema.
“Salga has over the past few years actively engaged with Eskom to ensure that Service Delivery Agreements (SDAs) are signed between municipalities and Eskom (where Eskom is providing reticulation services within municipal areas). Eskom has consistently indicated that they are unable to sign these agreements,” he said.
Sema added that the solution was not for Eskom to collect revenue on behalf of municipalities. He said that would compound the revenue collection and credit control problems that municipalities already face and further undermine the long term sustainability of electricity reticulation.
“Salga advises all municipalities to continue to engage with Eskom to put service delivery agreements in place which comply with the requirements of section 76 and 81 of the Municipal Systems Act. Salga rejects in the strongest terms any attempts by Eskom to impose any revenue collection arrangements on municipalities,” Sema said.
“We call on Eskom to engage with both Salga and municipalities in the collaborative spirit of the Memorandum of Understanding to conclude SDAs that comply with the law and will ensure that municipalities’ ability to collect revenue for all their services is not jeopardized,” Sema added.