Defaulting municipalities will get cut, warns Eskom

Eskom. Picture: Bloomberg
Eskom. Picture: Bloomberg

Eskom has threatened to cut off electricity to municipalities for non-payment, even during the Covid-19 coronavirus lockdown.

The national lockdown, which enters the less restrictive Level 4 on Friday, is expected to result in payment defaults as some households did not earn an income when the economy was shutdown.

As a result municipalities are likely to also default on their bulk accounts, including electricity.

Last week the power utility rejected a proposal from the Ngwathe Local Municipality in the Free State for a three months payment holiday.

This week Parliament was also not sympathetic to the municipalities, which owed Eskom R26 billion last October, up from R9.8 billion in 2017.

In a letter sent last Wednesday to Ngwathe municipal manager, Bruce Kannemeyer, senior customer services manager at Eskom Vanisha Reddy, said the power utility was rendering an essential service.

“To successfully continue to render this service, it is important that payment for services is maintained,” Reddy wrote.

“Failure to settle accounts timeously may result in customers being subjected to Eskom’s credit control processes.”

She added that the municipality should seek an alternative remedy to the situation if it was unable to make payment.

With the revenue erosion, municipalities are likely to default on bulk supply accounts, as they will not be able to use disconnections to put pressure on non-paying consumers.
Salga

On Tuesday the SA Local Government Association (Salga) briefed the portfolio committee on cooperative governance and traditional affairs in Parliament about its frustrations with Eskom.

During its last national executive committee meeting earlier this month, Salga acknowledged that the lockdown had and would likely continue to impact the income levels of many households.

This meant that the electricity and water supply disconnections to defaulting households would only worsen the Covid-19 crisis.

Said Salga: “The reduced collection levels are highly likely to negatively affect the ability of many municipalities to service their bulk accounts for water and electricity, among others.”

Salga resolved that municipalities must introduce measures to collect as much revenue as possible but the disconnections of water and electricity should be suspended until the end of the lockdown.

It proposed that talks be opened with Eskom to also suspend all disconnections during the lockdown, and also review the interest payable on arrears caused by and linked to the national state of disaster.

“With the revenue erosion, municipalities are likely to default on bulk supply accounts, as they will not be able to use disconnections to put pressure on non-paying consumers,” Salga said.

It said the national lockdown may even cause up to date municipalities to fall into the Eskom debt trap.

“While we are on lockdown, the demand curve for electricity will be high. Some municipalities will exceed notified maximum demand and Eskom will impose the penalty regime,” it said.

This is crucial that funds owed to Eskom be paid so that the nation is not in darkness again.
Faith Muthambi

However, Salga noted that Eskom was “still doing business as usual during the Covid-19 lockdown and continues to send disconnection threats”.

Portfolio committee chairperson Faith Muthambi, in a statement in Tuesday, said Salga was in consultation with Eskom for a payment holiday for municipalities, as they are unable to service their debt.

“They are also requesting Eskom not to disconnect the electricity supply to their consumers if they do not pay up,” she said.

“However, the committee believes that municipalities must pay for services rendered by Eskom as Eskom already has cost recovery measures in place to recoup the funds owed to it by municipalities. This is crucial that funds owed to Eskom be paid so that the nation is not in darkness again,” Muthambi said.


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