The City of Tshwane is paying Eskom in dribs and drabs in a desperate bid to avoid getting its bulk power supply disconnected.
The power utility announced on Tuesday that it was considering disconnecting power supply to the country's capital after Tshwane paid only R68m of its R1.6bn July bulk electricity bill.
Peter Sutton, Tshwane finance MMC, who met Eskom officials on Wednesday to address the debt, told TimesLIVE Premium the metro was trying by all means to pay the power utility the outstanding amount despite its cash flow problems.
“We can't commit to a date yet, we will be doing further projections on our side and hopefully by Friday we can give a firm commitment to Eskom for full outstanding amounts. In the meantime we are making daily payments to try to service the arrears,” Sutton said.
Sutton said he would be meeting Eskom officials again on Friday but he pointed out that Eskom could not just “flip the switch on them”.
Eskom cannot switch us off immediately. There’s a process they have to follow.
— Peter Sutton, Tshwane finance MMC
“They cannot switch us off immediately. There's a process, however, we are trying to find a solution to the problem, to the money we owe as quickly as possible. We will do all we can to avoid a disconnection,” Sutton said.
Sutton said Tshwane was engulfed by liquidity and cash flow problems, which make it unable to fully pay what it owes on its Eskom account.
“We have a bill for R1.6bn and that’s for July ... there’s no arrear debt to that. The entire value chain is misaligned. Eskom expects payment from us within 15 days and most of our payments come towards the end of August for July,” Sutton said.
Sutton said the metro was collecting about 77% on current invoices and that most of its payments come after 60 days, which creates a huge cash problem for the metro.
“If you take the current invoices that we send out every month, the number of people who pay is about 77% and that's way too low ... we need to up the collection and get people to pay their accounts,” Sutton said.
Tshwane's financial problems are not new. Last year mayor Randall Williams admitted the city was technically bankrupt, as its liabilities were R14bn and exceeded its assets by R3bn.
In February, Tshwane raised R300m in a week through its aggressive campaign to disconnect nonpaying customers, which was being led by city manager Mmaseabata Mutlaneng.
At the time, Tshwane had an Eskom bill of more than R800m, which the municipality was struggling to settle.
Sutton said the metro was embarking on a huge prepaid meter-installation drive and was tightening its credit control measures in the hopes of improving the their cash flow.
“The prepaid meters will help improve the cash flow and bring the value chain more aligned ... We consistently engage communities so they understand the importance of paying their municipal accounts,” Sutton said.
Eskom said what Tshwane paid “did little to dent the massive outstanding balance on its electricity account”.
“The power utility had numerous engagements with Tshwane’s management to ensure it pays its account. Nevertheless, these actions have not yielded any results, as the city has continued with the same pattern,” Eskom said in the statement.
Eskom said the inconsistent payments were both untenable and unacceptable since Eskom’s financial position is well known.
“The city’s persistent failure to honour its payments places a huge burden on Eskom to continue providing it with electricity. Eskom will continue to apply different approaches to recover money owed to it and has acquainted the MEC of co-operative governance and traditional affairs of the risks associated with the late payment,” stated Eskom.
