Eskom celebrates 'biggest legal victory' against 'disgraceful' municipality

The Letsemeng local municipality in the Free State must pay Eskom everything it owes for electricity received from the power utility, and must do so promptly when these amounts are due.

This is according to a ruling from the Supreme Court of Appeal. The municipality's Eskom bill is R108.5m.  

Eskom described the judgment as its “biggest legal victory” against delinquent municipalities, and said it affirmed Eskom’s right to payment for services rendered to councils.

“It is a matter of public record that municipalities owe Eskom more than R44bn in unpaid debt for the supply of electricity,” Eskom said.

Eskom said its attempts to recover the debt have often been frustrated by conflicting high court judgments, some of which have been used by delinquent municipalities as justification for their failure to meet their obligations to Eskom.

The power utility and Letsemeng had been locked in a dispute over nonpayment for some time, resulting in Eskom issuing a final notice to interrupt power supply to the municipality with effect from February 18, 2020.

This precipitated the launching of an urgent application by Letsemeng in the Free State High Court to interdict Eskom from implementing the interruption pending the review of that decision.

Eskom opposed the application and filed a counter-application in which it sought to compel Letsemeng to comply with its obligations.

The high court granted Letsemeng the interim interdict and dismissed Eskom’s counter-application to compel payment. Eskom was granted leave to appeal the high court judgment in the SCA.

In its judgment which was passed last Thursday, the SCA directed the municipality to pay Eskom R5m which the National Treasury had made available to the municipality for the payment of its electricity debt.

Eskom said the SCA was critical of the “dishonesty” of the municipality in its dealings with Eskom, which it described as “disgraceful”. The SCA awarded costs against the municipality.

The SCA pointed out efforts made by Eskom to help the municipality with the structuring of its debt and that this was evident in at least two written acknowledgments of debt and repayment plans.

The SCA further noted that the repayment plans were prepared by the municipality; and that the municipality on its own accord structured and prepared the terms of repayment and gave written assurances that it could afford to pay the amounts that formed part of those repayment plans.

“Eskom welcomes the decision and assures the public it will continue with its efforts to recover the debt owed by delinquent municipalities. Eskom encourages all its customers to honour their payment obligations.”

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