South African Energy Giant Fights For Funds Owed By Local Govts

Eskom has cut the electricity supply of two local municipalities that collectively owe U.S.$181 million, causing devastation for municipalities at the forefront of employment and economic activity, writes Ray Mahlaka for the Daily Maverick.

Was Eskom justified in disconnecting power to local municipalities that owe it billions of rands in unpaid electricity bills and, in the process, causing harm to households and businesses that are not at fault and are being thrown into darkness? And can Eskom unilaterally reduce power supply to municipalities in arrears or refuse them more electricity despite both parties being bound by long-standing electricity supply agreements?

These are questions that were before the Constitutional Court on as Eskom sought to overturn an earlier court's ruling that forced it to fully restore electricity to two municipalities that collectively owe it U.S.$181 million. The heavily indebted municipalities are the Ngwathe Municipality in the Free State province - owing Eskom U.S.$84 million and the Lekwa Municipality in Mpumalanga - owing U.S.$97 million.

The case at the highest court in the country will be a litmus test for Eskom's ability to recover unpaid debt from municipalities, which stood at U.S.$2.6 billion by the end of September 2021. Without collecting debt from municipalities - which forms a crucial part of its revenue - Eskom cannot service its smothering debt load of more than U.S.$23 billion, and the power utility will be pushed to ask the government for more bailouts.

Load-shedding continues to affect the nation and the power utility expects between 37 and 101 days of scheduled power cuts during the winter season, according to the head of transmission at Eskom, Segomoco Scheppers.