Eskom loses battle over cutting municipal supplies

Apex court upholds ruling that power utility cannot cut electricity in bid to get errant towns to pay up

Eskom has been dealt a blow in its bid to recover unpaid bills after the Constitutional Court upheld a ruling by the Supreme Court of Appeal that the power utility’s decision to disconnect electricity to two defaulting municipalities was irrational.

Eskom, which is burdened with about R400bn in debt and remains reliant on government bailouts to survive, has on several occasions interrupted power supply to extract payment from municipalities, which owe it about R36bn.

The matter dates back to cases brought against Eskom by Resilient Properties and Others and another matter against the Sabie Chamber of Commerce and Tourism and Others.

Then, the appeal court concluded that Eskom’s decision to interrupt bulk electricity supply to the Emalahleni and Thaba Chweu local municipalities was irrational as Eskom knew full well it would not result in the financially strapped municipalities settling their debt.

Sakeliga, the lobby group that largely represents the interests of Afrikaans business owners, joined both cases as a friend of the court. The group’s CEO, Piet le Roux, said on Tuesday the Constitutional Court’s decision heralded a new era for electricity security in local towns and for limiting the harms stemming from disputes between failing organs of state by binding them to intergovernmental dispute resolution, and ordinarily barring them from withholding services from private, third parties.

While the implications of the ruling are obvious for the case of disputes between Eskom and municipalities, the real strength of the judgment goes much further, Le Roux said. At its core, the judgment proscribes all organs of state, not only Eskom and municipalities, from making their internal disputes the problem of private, third parties.

Eskom spokesperson Sikonathi Mantshantsha said the Constitutional Court ruling will hurt the power utility’s drive to collect debt.

“This development is noted, and it puts yet another hurdle in getting these municipalities to honour their obligations.

“Eskom however, continues to work to secure active partnerships with municipalities, with a view to assisting them rebuild all their administrative capacities to improve revenue collection rates from their own customers,” Mantshantsha said.

Le Roux noted that while the Constitutional Court ruling secures local energy provision, it does not ensure that Eskom receives the money end-users pay. Hence, he said, Sakeliga has launched another court challenge to bar two errant municipalities from receiving direct fees for crucial services.

The court challenge, which is yet to be heard, targets the Ditsobotla (formerly Lichtenburg and Coligny) and Naledi (Vryburg) municipalities in the North West, whose outcome could set a legal precedent in terms of how similar cases of nonpayment are handled.

Sakeliga wants the municipalities to be placed under the administration of a special independent paymaster, meaning that they will not receive direct payments from residents and businesses for electricity and water.

Sakeliga says millions of rand for electricity, water and sewerage services and other infrastructure projects are mismanaged and disappear each month, at the expense of businesses and job-creation efforts.

THIS DEVELOPMENT PUTS ANOTHER HURDLE IN GETTING MUNICIPALITIES TO HONOUR THEIR OBLIGATIONS

Sikonathi Mantshantsha Eskom spokesperson