Eskom has suspended planned supply interruptions to three more municipalities, after reaching payment agreements with them on Monday.
This comes after Eskom on Sunday announced the suspension of power cuts to five municipalities which, together with others, owe the power utility R10.2bn in debt.
Eskom said so far payments have been received and payment plans agreed upon with Dihlabeng and Masilonyana municipalities in the Free State Province; Mamusa in the North West Province; Nketoana, Nala, Tokologo, and Mantsopa municipalities in the Free State Province; and Walter Sisulu municipality in the Eastern Cape Province.
Eskom Acting CEO Matshela Koko said in a statement on Monday that it will be monitoring strict adherence to the payment plans.
“Time has come for the outstanding overdue debt to be honoured in full. Eskom is bent on ensuring that this happens for the sole benefit of, not only Eskom, but the entire South African economy,” he said.
The amount owed by defaulting municipalities rose to R10.2bn from R6bn six months ago, Eskom explained. “In the last five years, the overdue debt has increased tenfold with the March 2017 forecast being in excess of R12bn,” it said.
Eskom will continue with the supply interruptions of electricity to the remaining municipalities, starting from Monday.
Koko said being a socially aware entity, Eskom opted for a less invasive method of collection. “It cannot be overemphasised that relevant laws and agreements permit Eskom to effect 100% electricity disconnections upon non-payment, subject to the prescribed due processes. But we did not exercise this option.”
However, Eskom said it can avoid supply interruptions if the municipalities adhere to the following three requirements:
- A cash payment as negotiated with each municipality;
- A written undertaking in the form of a Council Resolution that current accounts will be honoured going forward; and
- A payment plan for the arrears supported by a Council Resolution.
On January 5, the North Gauteng High Court dismissed AfriForum’s application to prevent Eskom from cutting off supply to the municipalities.
Judge Hans Fabricius made the ruling on an urgent matter submitted by the civil rights group, which sought to stop Eskom from cutting power. The application by AfriForum was dismissed with costs.
“Municipalities ought to be held accountable,” said Fabricius.
Speaking to Fin24 after the ruling, Koko said R1.2bn of debt from the municipalities has already been written off and a further R1.2bn will be impaired. This means Eskom’s total impairment over the next 12 months will come to R2.4bn.
“We cannot borrow money to generate electricity to give to municipalities that don’t pay.” He added that it is important to recover debt as “responsible citizens”.
“To entice defaulting municipalities, Eskom offered to suppress future interest on the overdue amounts provided they adhere to the payment plans,” Koko said in a statement.
“At an interest rate of prime plus 5%, this is a huge incentive and could save the municipalities millions of rand.”
Eskom will cut electricity between 06:00 and 08:00 and from 17:00 to 19:30 between Mondays and Fridays. It will cut power from 08:30 to 11:00 and 15:00 to 17:30 on Saturdays and Sundays.