Eskom slaps defaulting councils with interest

Municipalities’ unpaid Eskom bills have led to high interest rates, power cuts, government interventions and court cases.

Johannesburg - Municipalities’ unpaid Eskom bills have led to high interest rates, power cuts, government interventions, court cases and threats of jail.

Last week, The Star reported that Eskom is still trying to get defaulting municipalities to stick to existing payment arrangements and sign updated ones, as only 11 of 56 which signed agreements last year actually kept to them.

The National Treasury released the quarterly financial report for municipalities last week, for the period ending March, which lists the outstanding municipal debt to Eskom as R9.6 billion, including R4.8bn owed for more than 90 days, plus another R2.7bn owed to water boards for more than 90 days.

Eskom has threatened limited power cuts to defaulting municipalities and, in some cases, briefly implemented this. It charges defaulters interest at prime plus 5 percent, which is currently 15.5 percent.

In February, The Star reported how the Eastern Cape government spent money intended for building water infrastructure on paying off municipal electricity debts; days later the municipality which should have got the water infrastructure declared a disaster due to drought, as it needed money to buy drinking water.

In August last year, a parliamentary report noted that Cogta (Co-operative Governance and Traditional Affairs) had paid the Eskom bills of two Eastern Cape municipalities.

In April last year, the Treasury withheld an equitable share payment to municipalities with Eskom and water board arrears; they all scrambled to sign debt agreements, and that withheld money was later paid over.

There have been acrimonious court cases over the years, with both municipalities and their irate customers (who have paid their own bills) trying to stop Eskom from disconnecting defaulters.

Civil action group AfriForum recently took Eskom to court over threatened cuts to the supply to the Kamiesberg Local Municipality in the Northern Cape; five more Northern Cape municipalities were later added.

The lights have stayed on, but only because municipalities are making payments.

In papers in the high court in Pretoria, Eskom said Kamiesberg owed it R7.6 million by May last year and had agreed to 12 monthly instalments, but soon defaulted. In January, a new plan was signed for the outstanding R3m, which included VAT and interest to be paid over seven months.

The Treasury report notes that Kamiesberg owes Eskom R9.5m for more than 90 days, and logged another R3.2m owed for between 60 and 90 days.

louise.flanagan@inl.co.za

THE STAR