Eskom has started a formal consultation process that could see 14 municipalities lose their electricity supply as the power utility tries to claw back more than R110 billion in unpaid bills.
Most of the municipalities facing possible power cuts are in Mpumalanga, followed by the Free State, North West, and one in the Eastern Cape.
The state-owned enterprise is issuing notices under the Promotion of Administrative Justice Act (PAJA), giving affected municipalities a chance to make their case before any supply interruptions happen. Eskom says it has tried everything else through the Intergovernmental Relations Framework Act.
The 14 municipalities in Eskom’s sights have either not paid their bills for at least 18 months, failed to meet conditions of the National Treasury’s municipal debt relief programme, or pose a serious financial risk to the power utility.
Agnes Mlambo, Group Executive Distribution (acting), said Eskom needs to tackle rising debt to protect the operational stability and financial discipline it has worked to rebuild over the past three years.
“Through the turnaround, we are enabling business to protect and create jobs and supporting strategic industries to remain competitive, that in turn enable communities to thrive,” Mlambo said.
Eskom has invited written proposals from anyone who might help find a sustainable solution. The utility will decide what to do once it has reviewed all submissions.
If municipalities don’t act, Eskom will move ahead with credit control measures, including cutting electricity supply at set times. If the defaults continue, the utility will limit supply to match whatever payments it receives.
The power utility says it understands communities may suffer, but supplying electricity without payment simply can’t continue. Municipalities collect money from customers for electricity services, and when they don’t pass these funds on to Eskom, it threatens the utility’s ability to keep the lights on.
The National Treasury’s debt relief programme was meant to help by ring-fencing old electricity debt and freezing related interest, giving municipalities breathing room to meet their current obligations.
But the growing municipal debt is also holding back South Africa’s electricity reform plans, which aim to open up the market to new players. The debt crisis is delaying progress on splitting up Eskom’s distribution business.
Despite the National Treasury’s intervention to restore sound financial management, municipal debt has continued to climb, forcing Eskom to take decisive action on debt recovery.
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