Eskom rejects Tshwane metro payment deal after only paying less than R500m of R1bn overdue debt

Eskom management has rejected an arrangement set out by the Tshwane metro that would have seen the municipality attempt to settle its bill stationed at over R1-billion for August’s electricity consumption.

The Eskom Gauteng media team had last month invoiced Tshwane R1.6-billion for electricity consumption, which was due on September 16.

Tshwane metro has, however, been financially strained and has been making irregular payments to Eskom for electricity consumption since earlier in the year.

The Eskom Gauteng media team informed Rekord that it was pinning its hopes on the Tshwane metro halting its tradition of erratic payments.

“We hope that the municipality will start to make payments accordingly.”

The Tshwane metro submitted a revised payment arrangement proposal on September 28; however, Eskom declined the request proposed in a meeting held with Tshwane’s management team on Friday.

Eskom said the request came after the metro made a small payment of R292-million on its R1.6-billion debt.

By Friday Tshwane had managed to pay an additional R200-million.

“Tshwane has failed to honour its August invoice of R1.6-billion paying only R492-million by Friday in total.”

Eskom on Friday advised the metro to settle the balance of R1.1-billion by close of business on September 30 and outlined that it would continue to implement different methods to recover money owed to it.

“We have asked National Treasury to facilitate the dispute it has declared to attain a resolution to the municipality’s inconsistent payment pattern.

“The municipality’s erratic payment pattern is in breach of the electricity supply agreement (ESA) it holds with Eskom, and it has a devastating impact on the power utility’s cash flow.”

The power utility’s media team said Tshwane metro’s partial payment on its account exposed Eskom to serious financial risk and its ability to supply electricity to customers due to under-recovery.

The team said other municipalities in Gauteng such as Johannesburg (City Power) were up to date with their payments.

“The Ekurhuleni municipality pays about 50% of its bill on the due date and interest at the end of the month. This is also in breach of the electricity supply agreement it has with Eskom.”

In July, Eskom threatened to disconnect the Tshwane metro.

It said it would, however, 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.

“Eskom is closely monitoring all metro and municipality accounts, and follows a strict debt collection process should they not settle their bills on time.”

Eskom also recommended that aggrieved businesses and residents threatening to sue Eskom take matters up with the Tshwane metro.

“We believe Eskom has an agreement with Tshwane metro, which requires that in circumstances where it has been breached. Eskom has the right to implement credit control measures in line with Public Finance Management Act.

“Tshwane’s customers need to address their concerns with the metro for failing to pay.”

The Tshwane metro’s problems with Eskom started in January when it did not pay its R635-million bill on time, and R878-million for July. It was the same for August, with a higher bill.

An In-Year Tshwane Financial report for August indicated that the metro’s Year to date (YTD) revenue collection, had an unfavourable variance of R594- million against the YTD budget.

This was as the actual revenue amounted to R7.8-billion.

It listed that the YTD variance on revenue was mainly due to:

– Property Rates collection sat at R13.7-million, which was unfavourable as it was an amount less than projected.

– While service charges for electricity were at R273.7-million, which was also unfavourable as the revenue was less than projected mainly on the sale of electricity and reconnection fees.

“There is a need to ensure the continuous audit of meters to address low buys and no buys, and to ensure the replacement and programming of faulty meters and the timely reading of meters to minimise estimated accounts,” the report stated.

Tshwane mayoral spokesperson Sipho Stuurman responding to the August bill said the metro acknowledged that the September bill for August consumption was due.

Tshwane metro spokesperson Lindela Mashigo confirmed that Tshwane had again submitted a payment arrangement as standard practice in municipal affairs to sort out the debt.

“The City is committed to honouring payments to its creditors, Eskom included. To display our obligation, the City paid nearly R500-million towards the arrears in question.”

Mashigo said, despite the financial difficulties the City found itself in, daily payments had been made to the power utility to reduce its current debt.

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