‘Misunderstanding’ has led to R86-m interest

Recently Eskom announced that the City of Ekurhuleni (CoE) owed it R544-million, stating it has charged the city R86-m in interest for late and outstanding payments.

ALSO READ: CoE disputes R544-million debt to Eskom

The entity said in a statement the electricity debt owed to Eskom by Gauteng municipalities continues to escalate, as more fail to service their Eskom accounts, and that CoE was among those with increasing debt to the parastatal.

Eskom, however, acknowledged that on February 18, the city paid a partial amount of R530-m to the parastatal.

“This amount was a portion of its bulk accounts, which amount to R1 074-billion that was due to Eskom.

“The amount of R544-m remained outstanding, and now Eskom expects the City to pay the overdue amount,” Eskom said.

Eskom warned that failure to pay the overdue amount is in breach of the electricity supply agreement between Eskom and the City.

But in response, the city urged Eskom to publicly retract its statement.

“The city is disturbed by the statement issued by Eskom and wishes to put it on record that it has not failed to service its account with Eskom,” said CoE spokesperson Zweli Dlamini.

“The city believes Eskom’s statement is misrepresentative of the truth and it is profoundly unfortunate.

“To protect the reputation and integrity of the City of Ekurhuleni, the city shall not hesitate to initiate litigation against Eskom over the non-compliance with municipal finance legislation,” said Dlamini.

He said CoE has, on multiple occasions, disputed Eskom’s tendency to flout legislated financial practices.

“A crucial aspect to the dispute, and which was already addressed with Eskom, is the incurring of interest charges of approximately R86-m. This amount is strenuously defended.”

Dlamini said the City lodged a dispute with National Treasury regarding the R86-m in interest charges.

He added CoE believes an amicable conclusion can be reached between itself and Eskom to end the impasse.

“The city believes a healthy, working relationship with Eskom is still achievable.”

The NEWS reached out to Eskom for comment regarding the reply from CoE.

On March 2, the NEWS was directed to a television interview with CoE MMC for Finance Graham Gersbach and senior manager of customer services in Gauteng Daphne Mokwena.

In the interview, Gersbach confirmed partial payment on February 18 and added the rest of the payment would have been done 30 days from the date of invoice (March 2).

He said the rest of the payment on March 2 was normal practice.

Gersbach said the R544-m owed resulted from a misunderstanding and that Eskom had interpreted the 30 days as the end of a calendar month, while the city had interpreted the 30 days as 30 days from the date of invoice.

“It’s a difference of two days that they are disputing and the fact that they have been insisting on payment in 15 days.”

He said until 2020 when the pandemic hit, the city had paid its account to Eskom in 15 days, but as a result of the pandemic, the CoE’s reserves had been depleted.”

“We are still paying Eskom from our reserves because we get paid for the electricity supplied after we have paid Eskom”.

He claimed that if Eskom had engaged with the accounts department as it should have, they would have received the answers and would have been paid on time.

In response, Mokwena said a signed agreement between Eskom and Ekurhuleni stated that after the city is invoiced, they will pay within 15 days.

“The 15 days for their January bill were on February 18.”

She stated that when Eskom followed up on the rest of the payment due; they were told the payment would only happen on March 2 because the City had to pay salaries.

“It’s unfortunate because we, as Eskom, also need to pay salaries and there is a contract that is signed by both parties.

“All these years, they [CoE] paid in the 15 days until 2020, when the city told Eskom it was not collecting payments due to Covid-related matters, as businesses were not operating. We insisted they pay in the 15 days.”

Speaking on the R86-million in interest charges, Mokwena said since April 2021, the city had been paying Eskom 15 days late.

“We charge interest daily on the amount outstanding.”

She added the contracts between Eskom and all metros it services are for payment in 15 days from the date of invoicing, while local municipalities have 30 days to service their debt.

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