Eskom starting to play hardball in Soweto

Eskom is starting to play hardball with non-paying residents of Soweto, Netwerk24 reported on Sunday.

The state-owned power utility has apparently started to cut off the electricity of those who are not paying as well as anyone who interferes with electricity meters in order to connect to the grid illegally. Furthermore, fines are issued for "interfering" with meters.

Fin24 has previously reported that Eskom has started disconnecting power "to thousands of Soweto households".

In October Fin24 also reported that National Treasury had stipulated that Eskom needs to recover all debt owed to it by errant municipalities, national department and corporations - including in Soweto.

Municipal debt owed to Eskom stands at R25.1bn and could approach R30bn by year end, Eskom chairperson Jabu Mabuza warned recently. Eskom's results announced in October, showed that municipal arrear debt increased by R5.2bn from March 2019 to R25.1bn as at the end of September.

Residents in Soweto owe Eskom a total of R20bn - almost half of the total local municipal debt owed to the electricity utility. Many Sowetans claim they simply cannot pay.

Soweto ANC councillor Mpho Sesedinyane told Fin24 in November that a flat rate for electricity could help foster a culture of payment among Soweto residents. Sesedinyane believes a proposal for a R150 monthly flat rate for electricity could be a starting point to address SA's non-payment woes.

The flat-rate proposal was the brainchild of the South African National Civic Organisation – a non-political organisation which advocates on behalf of communities in engagements with government and other service providers.

Eskom, in turn, foresees that such a uniform set charge per household would lead to a waste of electricity, according to Netwerk24. Furthermore, Eskom explained that it is in any event not allowed to negotiate separate tariffs or make preferential arrangements outside of tariffs set by the National Energy Regulator (Nersa). Nersa tariffs apply to all users in the country.

Eskom has applied to Nersa for price hikes of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22. It argued that the tariff hike would help it tackle its mounting debt burden, Fin24 previously reported. Nersa has, however, granted Eskom a lower tariff increase, than what was requested, a decision Eskom now wants to challenge in the North Gauteng High Court.

Eskom claims Nersa's determination has left it with a shortfall of R102bn. The regulator in March extended tariff increases of 9.41%, 8.1% and 5.22% to Eskom over three years.

In the national budget announced in February, Finance Minister Tito Mboweni granted Eskom R69bn over three years. Cash-strapped Eskom needs a further R59bn lifeline to keep it afloat and enable it to pay interest on its mounting debt burden.

The non-payment of debt to Eskom has been flagged by President Cyril Ramaphosa, Mboweni and Eskom leadership, especially as the utility has been forced to borrow money just to pay the interest on the debt it owes.


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