Electricity and energy minister Kgosientsho Ramokgopa has defended recent, and very public, decisions by Eskom to “protect its interests” by going after defaulting municipalities despite the inter-governmental relations (IGR) in place for such disputes.
Eskom has been on the warpath against municipalities that owe it billions of rand in electricity debt, attaching the bank accounts of one Gauteng municipality over its spiralling debt and now threatening to switch off another for similar reasons.
In September, the power utility successfully attached cash-strapped Emfuleni municipality's four bank accounts to the latter's ballooning R8bn debt. This was the second time within a year that Eskom took such action against the embattled municipality.
The R8bn owed to Eskom by Emfuleni for bulk electricity at the time represented about 10% of the then R82bn owed by municipalities. This amount now sits at R90bn, according to Ramokgopa.
The city’s financial impasse was only resolved in early October after Ramokgopa, finance minister Enoch Godongwana, Cogta minister Velenkosini Hlabisa and Gauteng premier Panyaza Lesufi's intervention.
It was also announced that Eskom would take over functions and services relating to the supply of electricity in the troubled municipality.
Last week, Eskom again set its sights on the City of Joburg over the latter's R6.3bn debt — made up of an existing R4.9bn bill and R1.4bn for its current account.
The power utility threatened to interrupt the power supply to Johannesburg over this debt, again prompting Ramokgopa to step in to try to resolve this impasse.
The dispute between the two dates as far back as 2019, but took an ugly turn in October 2023 when the city began defaulting on its electricity account. The metro claimed this was due to potential over-billing on Eskom's part and applied an automatic set-off against the latter's electricity account.
A failure to resolve this dispute saw Eskom approach the Johannesburg High Court, winning an order compelling the city to settle its outstanding bill, including its then-current R1.073bn bill. City Power confirmed it would appeal this ruling.
The minister, in a briefing held after a meeting with Eskom and Joburg officials on Monday, confirmed that a technical team would be appointed to look into the billing issues and provide feedback no later than November 25. City Power also committed to settle its current account. Once this has been done, Eskom, will withdraw the notice of its intention to interrupt supply to the city.
Speaking on the sidelines of the briefing, Ramokgopa defended Eskom's decision to either approach the courts for relief or take punitive measures against defaulting municipalities.
“Eskom has a responsibility as part of their licensing conditions to ensure that they collect [revenue]. Second, the board has got a fiduciary responsibility to ensure the financial sustainability of Eskom.
Eskom has a responsibility as part of their licensing conditions to ensure that they collect [revenue]. Secondly, the board has got a fiduciary responsibility to ensure the financial sustainability of Eskom.
— Electricity and energy minister Kgosientsho Ramokgopa
“In the previous administration, as a minister I was not responsible for Eskom and the interventions were limited. I know, for example, that Eskom did seek intervention of the shareholder [public enterprises minister] to say, 'these are the challenges we are facing, can you come in and help to address them.' And even [despite] the best efforts of my predecessors, they could not succeed. So the next step for Eskom to take was to go before the courts.”
Citing both Emfuleni and Joburg as examples, Ramokgopa said Eskom had an “an obligation to protect its interests” after both defaulted on prior agreements.
He did, however, concede that the utility needed to “exhaust all internal remedies” before taking this public approach.
“We must respect the inter-governmental relations framework. By that I mean, there has to be an honest and concerted effort to exhaust all internal remedies in an event of an inter-governmental conflict. This is a classic example of [that conflict] and therefore, there's no need to invite the court,” he said.
On how this could be remedied in future, Ramokgopa confirmed his intention to meet top 20 municipalities whose combined debt makes up 70% of the R90bn now owed to Eskom.
In July, this stood at R78bn and has grown by R12bn in the intervening months.
“If we can get that [resolved], then we can find a way to smooth the path to Eskom's financial sustainability. Otherwise, we're just throwing Eskom in the deep end and that's unacceptable. Of course, accepting that municipalities have challenges, we'll work with them to resolve those.
Adding to this was City Power CEO Tshifularo Mashava, who provided an update on the city's ongoing appeal against the high court judgment.
In June, the Johannesburg High Court ordered City Power and the City of Johannesburg to pay Eskom more than R1bn plus interest accrued for the cost of the bulk electricity supply services for March.
In August, City Power was granted leave to appeal the judgment that favoured Eskom over the billing dispute.
“We've given each other 14 days to find each other, so nothing is going to happen [during this period],” she said on the sidelines.
Mashava said for City Power, three issues were at the heart of their dispute with Eskom; incorrect tariffs imposed on street lights, the utility's apparent use of its system to distribute power to other areas, and over-billing.
“These [first] two are obvious, they must pay us. They haven't been paying us for 20 years. On the street lights, they must use the correct tariffs. So these are the two immediate [resolutions] we're hoping for.
“Then the over-billing issue, we're saying let's come to the party. If our calculations are not correct, we're happy to accept. So that's what we're hoping to get out of this,” she said.
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