Supplementary Budget 2020

UPDATE: Eskom denies sidelining Free State municipality

Eskom has denied that it will supply businesses in Harrismith directly with power as part of a new local agreement.

Rapport reported on Sunday that the Harrismith Business Forum signed a contract with the utility to deliver power directly to the town's 100 biggest power users, but Eskom said in a statement on Tuesday that this is not the case. 

Eskom will, however, directly collect payments from the businesses, which is unusual. In the rest of the country, municipalities collect electricity payments, and are supposed to pay it to Eskom.

The Maluti-a-Phofung municipality in the Free State owes Eskom more than R4bn in unpaid electricity bills - the biggest outstanding municipal power account in the country. The municipality has a monthly electricity bill of R180m, which was last paid years ago.

Across the country, municipalities now owe Eskom R25.1bn - and this has grown by R5.2bn since April. Some rural municipalities are not paying Eskom the money they receive from businesses and households, who faithfully pay their power bills. Eskom cut power to these non-paying municipalities – affecting those who have been paying their bills too.

The decision to allow Eskom to collect payments directly was taken by a local consultative committee that was established - by court order - in 2018. Representatives of the Harrismith Business Chamber, Eskom and the Maluti-a-Phofung Municipality all serve on the committee, which is chaired by the Minister of Cooperative Governance and the Department of Traditional Affairs (CoGTA), Nkosazana Dlamini-Zuma.

"One of the initiatives that the Committee agreed to assisting the Municipality with was to technically normalise the top 100 Large Power Users (LPU) accounts and also for Eskom to collect," Eskom  said.

"No agreement was concluded with the Harrismith Business Chamber in isolation and Eskom did not side-line or bypass the Municipality in this process. In fact, the 100 customers will still be supplied by the Municipality."

Together, the 100 biggest businesses in the town pay electricity bills of R20m a month. The businesses include Nestle, Shoprite Checkers, the plastic company Alpla and the carpet producer Nouwens.

Eskom says the municipality paid the full R2.9m bill to install new electricity meters at these businesses, denying the Rapport report that it was split between the municipality and the local businesses.

"It is therefore factually incorrect to say that Eskom will deliver power directly to the 100 biggest power users bypassing the Municipality completely. Only the National Energy Regulator of South Africa and the Courts can make such a decision."

It also denied ever cutting off electricity in Harrismith due to non-payment.

"Eskom has never cut off electricity to Harrismith for non-payment because we were interdicted by the courts to do so as a result of the legal action taken by the Business Chamber. The statement saying that a sewerage plant was damaged as a result of Eskom cutting off electricity in Harrismith is untrue.

Last week, an inter-ministerial Eskom task team - chaired by Dlamini-Zuma - was supposed to brief the Standing Committee on Public Accounts on municipalities' outstanding Eskom bills. But Dlamini was a no-show.

Recently, the ANC narrowly clung to power in the Maluti-a-Phofung municipality after a number of its counsellors resigned.

This article has been updated to reflect Eskom's statement on the original Rapport article, which was quoted in the article.

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