20 January 2017

South Africa: Minister Lynne Brown Instructs Eskom to Give Municipalities Time to Clear Debt

press release

Minister Brown asks Eskom to give errant municipalities a little more time

The Minister of Public Enterprises, Lynne Brown, has instructed Eskom to afford municipalities time until the end of this month (31 January 2017) to clear their outstanding arrears before switching off the lights.

At the same time, Minister Brown urged municipalities in arrears to move with speed to clear their debts.

"Turning off the power supply does not only impact on individual ratepayers and municipalities, it has potentially disastrous effects on businesses, and therefore jobs.

"One cannot help feeling sympathetic to those who pay their electricity bills in good faith, only for the payments to be consumed by municipalities with precious little income and resources. This is a matter of national importance that I would urgently hope to discuss with the Minister of Finance.

"In the meantime, the amount of R10.2 billion, which grows exponentially, has a potential to undermine the sterling effort undertaken to restore Eskom back to its sound financial footing. The security of future revenue is paramount to Eskom's sustainability. It is critical for all municipalities to institute pre-paid billing to help build a payment culture.

"A healthy Eskom does not only meet its social mandate, through electrification and other transformational targets, but it also contributes to the positive sovereign rating of South Africa," said Minister Brown.

Minister Brown added that South Africa cannot afford an Eskom "whose ability to borrow from financial markets is constrained by the prohibitive interest rates arising from the negative financial position; which will result if we don't resolve this matter."

On 5 January 2017, the Honourable Judge Fabricius, in the AfriForum matter, handed down a judgment which emphatically reinforced the principle that Eskom has a statutory and regulatory right to disrupt supply in the event of non-payment by a customer.

The Court further indicated that it is necessary to appreciate the context in which Eskom operates within the national economy and that this needs to be seen against the background of its constitutional rights and obligations. Judge Fabricius emphasised that the duties of municipalities to honour their obligations to Eskom, are paramount in the present context.

"It is heart-warming to observe, that even with the relevant laws and mutual agreements which allow Eskom to totally withhold electricity supply, the entity's leadership was considerate enough to adopt a softer approach of scheduled interruptions during pre-announced hours.

"In order to strengthen this approach and secure its rights going forward, Eskom seeks to make any new payment arrangements orders of Court," said Minister Brown.

She said she was inspired by demonstrable cooperation by some municipalities.

"I am particularly humbled by the intervention of the respective Premiers as well as Committee's willingness to join hands with relevant stakeholders in an effort to find a lasting solution in our country's interest," said Minister Brown.

Issued by: Department of Public Enterprises

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