Eskom mistaken about right to terminate electricity – Sakeliga

Organisation says finding has not set a new legal precedent

Eskom mistaken about its right to terminate electricity supply to paying customers - Sakeliga 

16 October 2020

Eskom is drawing mistaken conclusions from the judgment this week in the Pioneer Foods case against Eskom, the Walter Sisulu Local Municipality, and NERSA.  

Contrary to its media statement, Eskom does not have the general right to terminate electricity supply to paying customers in defaulting municipalities. The judgment in the Gauteng Local Division Johannesburg is an outlier judgment if compared to the dozens of other judgments in which High Courts have found against Eskom. The Pioneer Foods finding is the result of facts specific to the application brought by Pioneer Foods and has not set a new legal precedent. 

Piet le Roux, Sakeliga CEO, says that it would be a mistake for Eskom to be emboldened in its current debt collection strategy by the Pioneer Foods case.  

“The judgment does not, contrary to Eskom’s suggestion, constitute license to resume electricity supply terminations. Terminating supply to paying end-users in imploding municipalities is neither a solution nor legal. Solutions should rather be sought with rerouting electricity payments away from the coffers of delinquent municipalities, where it is trapped, stolen, wasted, and prevented from reaching suppliers of services and infrastructure, of which electricity is but one example.”  

The following should be noted about the Pioneer Foods judgment: 

The judgment is better described as being against Pioneer Foods’s case, than in favour of Eskom’s right to terminate electricity supply. This has to do with a combination of technical and substantial matters, with the substantial matters on initial inspection open to appeal. 

The matter was heard before a single judge and not a full court, also known as a full bench, as is described in section 13(1)(a) of the Supreme Court Act.  There is already a plethora of conflicting judgments and full bench decisions which will enjoy precedent over the findings of the Gauteng Local Division Johannesburg. 

The Pioneer Foods judgment stands in conflict with the judgment of the Gauteng Division Pretoria, with special reference to the so-called Resilient case which was heard by the full bench of the Supreme Court of Appeal on 27 August 2020. In this case, Sakeliga had so far successfully assisted the courts with establishing that the default of a local municipality on its debt to Eskom is an intergovernmental dispute, subject to the Intergovernmental Relations Framework Act, and not something to be made the problem of paying end-users. These arguments were not advanced in the Pioneer Foods case. Sakeliga is awaiting the judgment of the Supreme Court of Appeal which will be of great importance to these types of cases.  

The public has succeeded in procuring dozens of interdicts of a similar nature to that sought by Pioneer Foods against Eskom. These judgments stand in stark contrast to the judgment in Pioneer Foods and Sakeliga foresees that this trend will continue in favour of paying end-users who bear no responsibility for the gross mismanagement of municipalities.  

Le Roux says Sakeliga “supports the principle that customers should pay for services received, and therefore that Eskom should receive the money due to it. We shall, however, continue to oppose Eskom in its strategy to hold paying customers hostage, since this offers no solution. In our current cases, as well as in further imminent litigation and related interventions, we seek to offer durable solutions, designed to prevent money from paying customers falling into the hands of corrupt, delinquent, or otherwise incapable municipal officials.” 

Le Roux says that chambers of commerce can play an important role in preventing electricity supply terminations: “Effective chambers of commerce are crucial for re-establishing order and prosperity at local municipal level. We are available to assist chambers with strategies to this end.” 

Issued by Piet le Roux, CEO, Sakeliga, 16 October 2020