Eskom threat of power cuts works as 5 municipalities pay

16 January 2017

Cape Town – Eskom has suspended power cuts to five municipalities who, together with others, owe the power utility R10.2bn in debt, it announced on Sunday.

Eskom said payments were received and payment plans agreed upon with Nketoana, Nala, Tokologo, and Mantsopa municipalities in the Free State Province, and Walter Sisulu municipality in the Eastern Cape Province.

“Eskom will be monitoring the strict adherence to the payment plans and the payment of current accounts of these municipalities, and any defaults will result in the interruption of supply without further notice,” it said in a statement.

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,” Eskom explained.

Eskom will continue with the supply interruptions of electricity to the remaining municipalities, starting from Monday. 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.

“Muncipalities ought to be held accountable,” said Fabricius.

Speaking to Fin24 after the ruling, acting CEO Matshela 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.

The municipalities who will have power cuts, starting from Monday, are:

Dihlabeng: 16 January

Masilonyana: 16 January Northern Cape:     

Ubuntu: 18 January

Renosterberg: 18 January North West:       

Ventersdorp: 16 January

Mamusa: 16 January

Naledi: 16 January

Lekwa-Teemane: 18 January

Maquassi Hills: 18 January

Madibeng: 18 January

Kgetleng Rivier: 18 January Mpumalanga:       

eMalahleni: 23 January

Mkhondo: 23 January

Mbombela: 23 January

Lekwa: 23 January         

Msukaligwa: 23 January         

Chief Albert Luthuli: 23 January

This article first appeared on Fin24, see here.