Industry News

Court dismisses Afriforum’s interdict, Eskom to cut off defaulting municipalities

 

JOHANNESBURG – The North Gauteng High Court on Thursday dismissed with costs AfriForum’s application to prevent Eskom from cutting off power of more than seven municipalities who are billions of rand in arrears.

This comes after AfriForum and AfriBusiness sought to interdict Eskom’s planned reduction of the supply of electricity to the defaulting municipalities in the Free State, North West, Mpumalanga and Northern Cape provinces.

Eskom said the amount owed had risen to R10.2-billion, which had grown over the past eight months from R6-billion. In the last five years, the overdue debt had increased tenfold, with the March 2017 forecast being in excess of R12-billion.

In a statement, Eskom said that in making his ruling, Judge Hans Fabricius had said that it was necessary to appreciate the context in which Eskom operated in the national economy, seen against the background of its Constitutional rights and obligations.

According to Eskom, Fabricius also acknowledged that Eskom had consulted all the municipalities and relevant stakeholders extensively since 2011.

Eskom’s interim chief executive, Matshela Koko, said that they had opted for a less invasive approach of scheduled interruptions for certain hours of the day, though appropriate legislation allowed Eskom to completely terminate supply to the defaulting municipalities.

“We didn’t take this path lightly as a company, we agonised on this matter endlessly. Besides the Promotion of Administrative Justice Act (PAJA) process, with which we fully complied, we embarked on a wide community-awareness initiative,” Koko said.

“To entice defaulting municipalities, Eskom offered to suppress future interest on the overdue amounts provided they adhered to the payment plans.”

Koko said at an interest rate of prime plus five percent, this was a huge incentive and could save the municipalities millions of rand.

The Electricity Supply Agreement, the Eskom Distribution Licence Conditions and the Electricity Regulation Act empowered Eskom to disconnect customers for non-payment after having given the customer 14 days written notice.

Municipalities contribute almost 42% of Eskom’s total sales and almost 41% of Eskom’s revenue annually.

“Failure to act renders Eskom in breach of the Public FinanceManagement Act and its licence conditions, as Eskom is obliged to collect all revenue due and enforce the conditions of the electricity supply agreement with municipalities,” Koko said.