Eskom given farmland worth R2.5bn as security for municipality's debt

The Matjhabeng local municipality in the Free State has agreed to hand over 139 farms it owns as security on debt owed to Eskom.

The farms are worth about R2.5bn.

The title deeds on the farms will be endorsed in favour of Eskom until the debt dispute between the power utility and the municipality has been settled. The municipality owes Eskom R3.4bn.

The agreement was made an order of the high court in the Free State.

Eskom took this route as a result of repeated failures by the municipality to adhere to its payment obligations for the bulk supply of electricity.

As part of the agreement, Eskom agreed to uplift the attachment of the municipality's bank account and it has handed the account back to the municipality.

However, R2.7m in the account will remain attached and in the care of the sheriff of the court.

Eskom said it had been involved in numerous court processes since 2014, when the municipality's debt to the power utility stood at R372m.

“The municipality has consistently failed to honour its obligations and payment agreements, as well as court orders, resulting in the debt escalating to R3.4bn over that period,” it said.

Eskom said the total municipality debt of R31bn (as of the end of July) continued to threaten the power utility's sustainability.

“Municipalities have a responsibility to fulfil their financial obligations for the bulk supply of electricity,” it said.

In an unrelated matter, Eskom said it had been granted leave to appeal against an order passed by the high court in Pretoria on August 28 to the Supreme Court of Appeal.

The court had ordered Eskom to immediately restore full maximum electricity supply to several areas in the Free State and Mpumalanga.

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