The Northern Cape provincial government has been granted an interim order to halt a judgment obtained by Eskom against the Renosterberg municipality for R93m in bulk electricity supply arrears.
The judgment, obtained in June 2021, was not honoured, prompting Eskom to obtain a writ of execution in September.
Eskom then attached the municipality’s bank account and has since withdrawn key funding, including R5.6m deposited by National Treasury and a R500,000 payment from the department of sport.
This has resulted in the municipality — which incorporates the towns of Petrusville, Philipstown and Vanderkloof — being unable to pay its 800 employees for the past eight months, bringing service delivery to a standstill.
The provincial government then stepped in, with cooperative governance and traditional affairs MEC Bentley Vass applying to the high court in Kimberley for interim relief to stay the execution of the judgment obtained by Eskom pending the finalisation of an application by the MEC to compel the municipality to declare a formal dispute with Eskom and enter into arbitration.
Eskom opposed the order, arguing it had made several attempts to engage the municipality and other stakeholders, including the MEC, to find a solution, and that, as a judgment creditor, it had every right to “employ execution methods”.
But acting judge Omphemetse Ken Chwaro ruled that, seen against the “overwhelming public interests brought about by the nature of the services rendered by the municipality, the balance of convenience should tilt in the MEC’s favour”.
“This is buttressed by the fact that Eskom has an order none of the applicants seek to assail, and regardless of the outcome of the main application, the municipality will still be obliged to pay the debt as reflected in the court order of June 2021.”
But the ruling has had little impact on service delivery in the municipality.
Renosterberg mayor Andrew Samson said they are still not able to access their bank account, as they are dealing with a writ of execution served on them by lawyers representing the Philipstown Ratepayers Association, which was awarded a cost order amounting to R1.2m against the municipality in 2017.
“We are still negotiating with their legal representatives. We’ve submitted a payment arrangement and we are awaiting their response,” Samson said.
Renosterberg is among the 25 municipalities named by auditor-general Tsakani Maluleke this week as having received disclaimed audit opinions. This means they could not provide any evidence for most amounts and disclosures in their financial statements.
She said mismanagement, underinvestment and lack of leadership at many municipalities showed no sign of improving.
Samson said the issues stem from the previous administration but have paralysed the current administration, which is unable to render adequate service delivery as a result.
“Some of the workers are coming to work, but others are not coming, and as a result service delivery is affected,” Samson said.
The 2017 legal challenge by the Philipstown Ratepayers Association centred on a lack of service delivery and incorrect billing by the municipality.
The problems of the municipality, with a population of about 12,000, date back to about 2009 when it started falling behind on paying for the bulk electricity, according to the Vanderkloof Ratepayers Association, which also took the municipality to court.
Failure to pay Eskom led to the power utility switching off the municipality without notice whenever it exceeded the agreed maximum bulk electricity supply as per the notified maximum demand (NMD) agreement.
Normally Eskom allows municipalities to surpass the maximum demand limit, imposing penalties when billing the towns for bulk electricity supply. However, for defaulting municipalities the power utility often opts to switch off power, as is the case with Lekwa in Mpumalanga and Ngwathe in the Free State.
The Vanderkloof Ratepayers Association launched a high court application against the municipality and Eskom to stop the regular blackouts, which they say began in about 2012.
Len de Jager, former chairperson of the Vanderkloof Ratepayers Association, said they felt compelled to take legal action against the municipality because the blackouts were affecting people’s lives and businesses, as they could hit any time without prior notice.
“I think Eskom was using us in their fight against the municipality by cutting off our power supply though residents were paying for electricity,” De Jager said.
However, before the case went to court an out-of-court agreement was reached with the municipality.
“We reached an agreement that the municipality will pay Eskom every month. But when that did not happen, Eskom used our court case to take on the municipality by attaching its bank account,” De Jager said.
Johan Coetzee, vice-chairperson and treasurer of the Vanderkloof Ratepayers Association, said the municipality’s personnel costs were making it difficult for the Eskom bulk power supply to be properly serviced.
“For example in August last year payments amounting to R160,000 were made into the municipal account by residents. From that money the municipality’s cut is 50%, but it only managed to pass on R24,000 to Eskom,” Coetzee said.
He said the municipality “has too many employees, with a high salary bill and low revenue collection”.
Samson agreed, saying: “As soon as we get back to normality we will conduct a skills audit and look into restructuring and reviewing the municipality’s organigram.”
Zolani de Klerk, the SA Municipal Workers Union’s shop steward at the municipality, said their workers were only paid their December and January salaries in mid-February.
“Even now the account is still frozen, and people are getting their houses and cars repossessed because the impact of this has been huge,” he said.
“Workers are the ones feeling the pain as they now find themselves on credit bureau and have also fallen behind on their medical aid,” De Klerk said.
Eskom said the nonpayment of customer accounts by municipalities has severely affected its profitability and cash flow.
“As at 30 April 2022, the overdue balance of all municipal accounts was R45.5bn,” the utility said.
Eskom declined to comment on the Renosterberg case, saying the matter was still before the courts, but said the municipality’s arrears was R93.8m at the end of April.
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