(Archive photo: GCIS)
AfriForum has written legal letters to Eskom, the national treasury, the energy regulator Nersa and the municipal association Salga to get details about plans to cut off 14 municipalities’ power due to non-payment.
Eskom issued this warning last week and is now asking for comments from the various communities before it makes a final decision in April about the steps ahead.
Maroela Media reported that Ekurhuleni on the Gauteng East Rand, which owes Eskom R3.4 billion, is one of the belhamels. The OR Tambo International Airport gets its power from the metro and it is also home to numerous industries.
Also read: Ekurhuleni may soon be plunged into darkness
Maroela Media has now obtained a complete list from Eskom of all 14 municipalities on this list of debtors.
Municipalities at risk of being disconnected:
- Ekurhuleni: Gauteng East Rand
- Beyers Naude municipality: Graaff-Reinet
- Hope Mix-municipaliteit: Cradock
- Nala Municipality: Bothaville
- Nketoana Municipality: Reitz
- Masilonyana Municipality: Theunissen
- Ngwathe Municipality: Paris
- Mpofana Municipality: Mooi River
- Govan Mbeki-municipality: Secunda
- Kgetleng River Municipality: Koster
- Mamusa Municipality: Schweizer-Reneke
- Thembalihle Municipality: Hopetown
- Kai !Garib Municipality: Keimoes
- Renosterberg municipality: Petrusville
Eskom announced in its notice that municipalities’ overdue debts to it now amount to more than R110 billion. This causes an existential crisis for the power giant. Eskom has also already exhausted the intergovernmental process that courts have ruled must be followed before Eskom can cut off the power supply.
The municipalities have also failed to meet the conditions of a debt relief program that the national treasury introduced in 2023 and which could mean that their overdue debts are written off in three years.
One of the conditions was that they had to pay their current Eskom bills on time and in full.
Eskom now invites stakeholders in these municipalities to comment on the matter.
Amanda Qithi, spokesperson for Eskom distribution in Gauteng, said with reference to Ekurhuleni that such comments will help determine which essential services may need to be excluded from any disconnection action.
From notices published by Eskom and seen by Maroela Media, it appears that Eskom is using the situation as leverage to get municipalities to enter into Distribution Agency Agreements (DAAs).
This means that Eskom will take over the power distribution function, while the municipality retains the distribution licence.
AfriForum is particularly interested in it, because it deviates from the original condition of the national treasury’s debt relief program. According to that, the municipalities that did not comply with the conditions of the program that could help them get the overdue Eskom debt written off in three years had to undertake to voluntarily apply to Nersa for the suspension of their distribution licences.
There are currently only three DAAs left. The two in Maluti-a-Phofung (Harrismith) and Emfuleni (Vanderbijlpark) came about in terms of court orders. Only Merafong (Carletonville) has entered into such an agreement with Eskom on its own. This was done late last year.
Maroela Media has obtained and studied the agreements. According to this, all the money that the consumers usually pay to the municipality is now paid into Eskom’s bank account. Eskom must use it according to an agreed ranking. For example, the current account must be settled first and then it can be used for repair and maintenance work and to pay off arrears.
(Photo: Eskom)
In addition, the municipality must pay a handling or administrative charge to Eskom for this service. However, it is unclear how it is calculated and whether it will be added to the municipal power tariffs.
The national treasury told Maroela Media that the first agreements were drawn up very one-sidedly in Eskom’s favour. Subsequently, a task force was established on which Eskom, the national treasury, the national department of cooperative government and traditional affairs (Cogta), the department of energy and electricity and the municipal association Salga were represented, to sort out these issues.
According to Nhlanhla Ngidi, head of electricity at Salga, it has been agreed that the municipality concerned will now rather open a separate bank account for the money and at the end of each month will agree with Eskom on the use of the money.
Maroela Media addressed several questions to the national treasury about the issue, but a week later he still has not replied.
Meanwhile, AfriForum has also written to Merafong, Eskom, the national treasury and Salga to get clarity on the legality of the municipalities’ agreement with Eskom.
According to the letter, which Maroela Media has seen, AfriForum suspects that the parties have ignored the legal requirements for council approval, a feasibility study and public participation before a municipality can outsource any municipal service in this way.
If this suspicion is correct, the agreement is void from the outset, AfriForum argues.
The deadline for responses from the various institutions to answer the questions about the Merafong agreement is March 20.
In addition to the DAA, Eskom also offers two other options to the municipalities on the cut-off list.
The second option is for customers to pay Eskom directly “for the electricity they consume at the Eskom tariff”.
This probably means that consumers will pay the significantly lower Eskom tariffs directly to Eskom, while the municipality itself has to collect its assessment. Although this will be very attractive for consumers and may create an incentive to pay directly to Eskom, it will be devastating for municipalities.
It can also be seen as an attempt by Eskom to bypass the cumbersome process that the national treasury requires before municipalities can close DAAs.
Maroela Media could not get further clarification on this from Eskom.
The third option that Eskom presents to stakeholders is for the municipality to be placed on pre-paid electricity and only receive the amount of electricity it pays for. This could mean that many consumers are left without power.
AfriForum’s position is that Nersa should suspend the distribution licenses of the municipalities, because with their non-payment they are not fulfilling their license conditions. This will align with the initial debt relief plan.
The licenses should then be made available on the open market where Eskom, like other institutions, can compete for them, according to AfriForum.
These issues are likely to be brought to the fore for the 14 municipalities soon after the comment periods close in April. Eskom has indicated that it will make a final decision on the way forward in just over a week after the closing date.
