Court tells Eastern Cape council to start paying its R127m Eskom debt

Attempts to cut off electricity are being thwarted in court as ratepayers' associations continue to take on municipalities and Eskom.

Last week, the Cradock Business Forum, Middelburg Ratepayers Association and Cradock Ratepayers Association were successful in their court action against Eskom, the National Energy Regulator (Nersa) and the Inxuba Yethemba municipality.

They approached the court to force Eskom and the municipality to take every reasonable effort to settle the dispute between themselves without interrupting electricity supply to the consumers due to the municipality’s failure to pay Eskom.

The applicants started with their court action in June last year. A year later, judgment was delivered in their favour at the high court in the Eastern Cape.

The municipality owes Eskom more than R127m. The court ordered a payment schedule from August this year until December next year.

In their payment plan submitted to the court, the municipality had asked to start making payments to Eskom at the end of September this year - but the judge did not agree.

“In my view, there is no reason for the delay of the commencement of the payment plan beyond August 31. The municipality has had sufficient time since the commencement of the litigation herein during October 2019 to make payment to Eskom,” said judge Gerald Bloem.

"The municipality will have sufficient time during [the remainder of] June, July and August to make preparations for the commencement of such payment on or before August 31.”

Bloem also slapped the municipality with a cost order, ordering it to pay the applicants’ costs for the application, including the costs of two counsel.

The judge didn’t mince his words when he reminded the municipality how it previously failed to honour payment plans with Eskom.

“It is common cause that the municipality has in the past acknowledged its indebtedness to Eskom and agreed to a payment plan on more than one occasion. It has hopelessly failed to honour its obligations in each of those instances,” he said.

"In the last instance, the municipality acknowledged its indebtedness to Eskom on September 11 2018. Therein it agreed to make payment to Eskom of R1m per month commencing on December 31 2018 and R7m every three months until July 31 2021. The municipality made a few monthly payments in terms thereof until it stopped, claiming that it was unable to meet its obligations in terms of that payment plan.”

Bloem also ordered the municipality to keep separate financial statements, including a balance sheet, of its electricity reticulation business.

The judge also said the municipality’s financial statements must disclose monthly revenue received in respect of the supply of electricity and the extent to which such revenue is appropriated to pay Eskom in terms of the payment plan.

According to the payment plan, the municipality will pay Eskom R900,000 every month.

In December, Enoch Mgijima municipality in the Eastern Cape was hauled before the high court in Makhanda by the Border-Kei Chamber of Commerce and businesses including petrol stations, a soft-drink company and a dairy.

The municipality faced blackouts due to an R265m debt owed to Eskom.

The court ordered, by agreement between the parties, that a debt and payment agreement previously reached between the municipality and Eskom become an order of the court. In exchange, Eskom undertook to supply electricity to the municipality, except during load-shedding.

In 2018, the Koster Ratepayers Association was granted an interdict allowing it to take control of the municipality's water and refuse systems. At the same time, the high court in Pretoria ordered Eskom to halt its plans to cut the town's electricity because the municipality owed it R49m.