Financially strapped Tshwane threatens Eskom with legal action if cut off
“Due to the liquidity challenges of Tshwane, we do not have access to reserve funds or short-term loan funding to bridge the cash deficit we are experiencing.”
Tshwane metro has cautioned Eskom to desist from threatening to leave residents without electricity in the near future or it will pursue legal action.
The warning comes as Eskom and the metro engaged in a spat over an outstanding billion rand amount the latter owed to Eskom for July.
Eskom had billed Tshwane R1.6-billion for the month of July 2022, but the municipality failed to pay the amount in full.
Tshwane has since been in arrears for over 14 days and proposed a payment plan to Eskom, which the state-owned enterprise (SOE) has rejected.
Since the failure to reach the agreement for payment plans, MMC for Finance Peter Sutton said if Eskom moves to disconnect the metro, the metro would pursue legal action as Eskom was also owed over R49-billion by various municipalities across the country.
“Let me be clear in stating that such action [disconnecting the metro] would be unlawful and there is already legal precedent indicating such. Should any such action be pursued, the metro will immediately interdict Eskom from proceeding.
“We have further taken note that Eskom will declare a dispute in terms of the Intergovernmental Relations Framework Act, 2005 (Act 13 of 2005), and we await further communication in this regard.”
Sutton said the metro remained committed to finding a long-term financial solution to its erratic payment to Eskom.
Sutton was in hopes that the solutions would offer the metro a better payment position to ensure that Eskom invoices were paid in full on the stipulated due dates.
He said Tshwane currently faced various financial challenges, which affected payments to the SOE among other matters.
“Due to the liquidity challenges of Tshwane’s financial situation, we do not have access to reserve funds or short-term loan funding to bridge the cash deficit we are experiencing.”
Tshwane metro said it was critical for it to increase revenue collection levels to resolve its liquidity problems.
“We appeal to residents, businesses and other clients to pay their municipal accounts on time so that the metro can be able to pay creditors like Eskom.”
Sutton promised that the Tshwane metro would continue to make payments to Eskom despite its “unnecessary threats,” and rejection of the proposed payment plan.
He said the metro had promised Eskom to settle the outstanding amount 29 days after the due date, August 17.
“We would like to reiterate once more that we remain committed to settling the full outstanding balance as fast as possible.”
Sutton said it was false that Tshwane proposed to settle the outstanding debt within 76 days.
Eskom Gauteng spokesperson Amanda Qithi said the power utility met with the metro management on August 24 and 30 to appeal to it to settle the outstanding amount.
Qithi said the metro had proposed to settle the outstanding payment after 76 days, which was not in line with the contract it had with Eskom and the Municipal Finance Management Act (MFMA).
“Tshwane has breached the Electricity Supply Agreement it holds with Eskom.
“Eskom has rejected the proposed payment arrangement from Tshwane and is still considering disconnecting the City to secure the payment of the outstanding R1.17-billion,” Qithi said.
The municipality has to date, only paid R448-million, she added.
“The municipality assured the power utility that it would pay the outstanding R1.2-billion, but it only made a payment of R80-million.”
“These erratic payments make it a huge challenge to Eskom to continue supplying the city with electricity.”
She said Eskom rejected the proposed payment arrangement, and considered the plan “unacceptable given its [Eskom’s] current financial position”.
Qithi said Eskom would proceed with disconnecting the city and act in line with the Intergovernmental Relations Framework Act (IRFA).
“We have also stopped all projects in the pipeline and will invoke security guarantees.”
Eskom said the disconnection would be implemented after it had considered public opinion.
It said it would give members of the public and any stakeholders that might be affected by the supply interruption, the opportunity to make submissions with motivation for or against the intervention.
The utility said it would then consider all the submissions before it decided whether to switch off Tshwane, leaving residents in the dark or not.
Eskom operations and maintenance manager Daphne Mokwena said Tshwane customers who wish to avoid being cut off from power supply and obtain their electricity directly from Eskom cannot do so because “Eskom does not have a licence to supply electricity to City of Tshwane customers”.
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