Eskom attaches municipality bank account to recover R3.4 billion debt

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  • Eskom on Friday attached the bank account of Matjhabeng Municipality in the Free State.
  • The municipality owes Eskom R3.4 billion.
  • As at the end of July 2020, outstanding debt to Eskom by municipalities amounted to R31 billion.


Eskom has attached the bank account of Matjhabeng Municipality, in the Free State, to recover R3.4 billion in debt owed to it.

According to a statement issued by the power utility on Sunday, it had attached the local municipality's bank account on Friday, 4 September.

"This followed a court order granted in 2014, and resulted in the account being frozen. Eskom is in the process of establishing the balance and transferring the funds in the account to Eskom, to help recover some of the money owed by the municipality," the statement read.

Eskom said it will "continue to explore" all available legal avenues to recover outstanding municipal debt.

"This step on the part of Eskom is a result of the repeated failures by the municipality to adhere to its payment obligations to Eskom for the bulk supply of electricity.

"Since 2020 Eskom has only received five payments from the municipality amounting to R66.5 million, against a total bill of R1.3 billion for the period," Eskom said.

Eskom has been caught in court processes to recover monies from Matjhabeng since 2014, when debt was just R372 million.

"The municipality has consistently failed to honour its obligations and payment agreements, as well as court orders, resulting the debt escalating to R3.4 billion over the period," it said.

Total outstanding municipal debt owed to Eskom amounted to R31 billion as at the end of July 2020.

Eskom CEO André de Ruyter has previously said that collecting debt from municipalities is a "substantial challenge".

A lot of the problems with defaulting municipalities lie in their lack of capacity to collect debt, Fin24 previously reported.

Eskom has been working with the provinces and the Department of Cooperative Governance and Traditional Affairs to deal with the situation.

The power utility's own debt burden is some R480 billion. 

Compiled by Lameez Omarjee

 

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