Eskom has initiated a public consultation process on its intention to interrupt electricity supply in some municipalities.
The power utility explained that the move is aimed at addressing “escalating municipal debt, protect affordability, strengthen financial sustainability and advance sector reform”.
Municipal debt to Eskom has reached some R110 billion – including the Municipal Debt Relief Programme – to assist struggling municipalities to address their debt.
“Having exhausted all reasonable avenues through the Intergovernmental Relations Framework Act, Eskom is in the process of issuing notices in terms of the Promotion of Administrative Justice Act [PAJA], providing affected parties an opportunity to make representations before further action is considered.
“Around 14 municipalities have been selected because they have not settled their accounts for at least the last 18 months, have not met the conditions of the National Treasury municipal debt relief programme, or pose a significant financial risk to Eskom.
“Initiating the PAJA process ensures that Eskom complies with legal requirements while taking necessary steps to maintain the stability of the electricity supply system,” Eskom announced in a statement.
The State-Owned Entity (SOE) did not announce the names of the municipalities.
“Eskom encourages all stakeholders to support efforts to resolve the matter and invites written representations or proposals that may assist in achieving a sustainable solution.
“Eskom will determine and communicate the way forward once all representations submitted through the PAJA process have been fully considered,” the statement read.
The electricity supplier highlighted that while it “empathises with communities that may be affected”, it has been left with “no option but to initiate this process”.
“[This is] unless the municipalities urgently regularise their accounts as supplying electricity without payment is unsustainable.
“The municipalities collect revenue from customers for electricity services, and failure to remit these funds undermines Eskom’s financial viability, while impacting the delivery of electricity to the relevant communities.
“Should the municipalities fail to take corrective action, Eskom will proceed with credit control measures, which may include interrupting electricity supply at predetermined times, as permitted by law. If defaults persist, Eskom will be compelled to limit supply to levels commensurate with payments received,” Eskom explained.
Acting Group Executive Distribution, Agnes Mlambo added: “We have to address rising arrear debt to protect the operational stability we have restored and the financial discipline we have rebuilt in the first three years of our turnaround to deliver on our developmental mandate.
“Through the turnaround, we are enabling business to protect and create jobs and supporting strategic industries to remain competitive, that in turn enable communities to thrive”.
Interventions needed
Eskom explained that the amounts owed by municipalities is making it “impossible” to further delay interventions.
Furthermore, initiating the PAJA process ensures that the necessary legislative requirements are adhered to while taking steps to protect electricity supply.
“The persistent rise in arrears highlights the critical need for Eskom to proceed decisively,” the power utility said.
On the Municipal Debt Relief Programme, Eskom explained that the programme “ring‑fences historic electricity debt and suppresses related interest to create financial space for municipalities to meet their ongoing obligations”.
At least 71 municipalities have been enrolled into the programme with only 15 consistently meeting the programme conditions.
“Throughout the country, municipal debt has surpassed R110 billion, despite the National Treasury’s intervention through municipal debt relief programme aimed at restoring sound financial management. The persistent rise in arrears highlight the urgent need for Eskom to proceed with debt recovery decisively.
“The escalating municipal debt burden also has wide implications for South Africa’s electricity reform agenda, that is designed to enable new entrants to enter the marketplace and is delaying progress on the legal and operational unbundling of Eskom’s Distribution business,” the power utility said. – SAnews.gov.za
