Eskom Publishes Disconnection Notice for Local Municipality Over R328 Million Unpaid Debt

On Thursday, 28 November 2024, Eskom published a notice of the possible disconnection of bulk electricity supply to Tokologo Local Municipality (the Municipality) in the Free State in accordance with the provision of the Promotion of Administrative Justice Act (PAJA).

Should Eskom proceed with the disconnection, bulk electricity supply to Boshof, Seretse, Dealesville and Hertzogville will be interrupted daily from 31 January 2025 for a set number of hours per day.

The Municipality currently owes Eskom R328 711 887.46 (Three hundred and twenty-eight million, seven hundred and eleven thousand, eight hundred and eighty-seven Rands and 46 cents) for the bulk supply of electricity. This excludes the current account of a further R3 682 099.21 (Three million, six hundred and eighty-two thousand, and ninety-nine Rands and 21 cents) which became due and payable on 20 November 2024.

The last payment Eskom received from the Municipality was R150 000 on 05 October 2021.

The Municipality charges, collects and receives money from its customers for the supply of electricity but fails to hand over the portion due to Eskom. This is at Eskom’s detriment, and it is not sustainable. The Municipality is responsible for discharging a constitutional obligation but decides to withhold payments to Eskom. The decision by Eskom to proceed with the process to disconnect electricity supply is a measure of last resort to prevent the debt from spiralling out of control.

The Municipality’s breach of its payment obligation to Eskom undermines and places in jeopardy Eskom’s ability to continue the national supply of electricity on a financially sustainable basis. Eskom must exercise its right to disconnect the supply of electricity to the Municipality to protect the national interest in the sustainable supply of electricity to support economic growth.

Eskom invites all affected parties to submit written representations, comments and/or submissions indicating why Eskom should or should not proceed to reduce, disconnect and/or terminate the bulk electricity supply points. Eskom will appreciate progressive representations (including direct payment by customers or direct supply from Eskom), considering the magnitude and possible long-term effects of this problem.

Written submissions can be sent to:

Senior Advisor Key Sales and Customer Services
Physical address: 120 Henry Street, Westdene, Bloemfontein
E-mail address: [email protected]

The closing date for submissions will be close of business on 06 January 2025. After considering these submissions, Eskom will communicate the final decision on or before 16 January 2025. Please note that comments received after the closing date will not be considered.

Eskom appreciates the hardships the community and the economy will suffer should it exercise its statutory powers to disconnect the Municipality. There are no other meaningful options available for Eskom to stop the debt from growing and to collect for current consumption on bulk supply.

Background on intervention by stakeholders to empower the Municipality to pay its Eskom debt.

Around October 2021, Eskom and the Municipality engaged in the dispute resolution process chaired by the Head of Department of the provincial Cooperative Governance and Traditional Affairs (COGTA). Several workstream meetings were held without any resolution. After November 2021, no further meetings were held, and the Municipality had stopped paying for the bulk electricity supply. On 15 September 2022, the Municipality, through its attorneys, confirmed that they do not wish to participate in the Intergovernmental Regulations Framework Act (IRFA) process but rather pursue the dispute from the litigation point of view.

In March 2023, National Treasury introduced the Debt Relief Programme through Circular 124, within the context of section 34(1) of the Municipal Finance Management Act, 2003. All municipalities were invited to apply and participate in the Debt Relief Programme. The Circular stipulates that Eskom is to write off the municipal debt over three years subject to, among other conditions, the municipality paying its current account henceforth. The Circular further provides that the municipality, by electing not to participate in the Debt Relief Programme, confirms its choice of not doing anything about its financial problems. The Municipality failed to apply for the debt relief.

Despite all the avenues that Eskom explored and efforts to accommodate the Municipality, the matter has reached a point where Eskom can simply no longer afford to accommodate the Municipality without further financial strain and harming its own business. In terms of the Constitution and the IRF, the Municipality is supposed to cooperate and assist Eskom with fulfilling its mandate of ensuring that citizens have access to affordable electricity. The Municipality has breached these obligations by not paying Eskom for the bulk electricity it supplies, making it impossible for Eskom to fulfil its mandate.

Courtesy of Eskom

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