Eskom issues disconnection notices as municipal arrears pile up

20 Mar | Engineering News.

State-owned electricity utility Eskom has confirmed that a number of municipalities in the Free State, North West, Mpumalanga and, more recently, Gauteng are facing possible bulk supply disconnections, owing to nonpayment of arrears debt.

Arrears debt of older than 30 days stood at more than R1.17-billion at the beginning of March – the figure excludes the Soweto arrears, which stood at more than R3.3-billion in November last year.

Eskom stressed that disconnections were a last resort, but confirmed with Engineering News Online that it had initiated disconnection processes with a number of municipalities.

It refused, however, to identify the number or the names of the municipalities affected.

Eskom said only that the Premiers of Mpumalanga, the North West and Free State, as well as the Ministers of Finance, Public Enterprises and Cooperative Governance and Traditional Affairs had been “informed about the bad debt situation and its implications” and that engagements were ongoing.

Confirmation of the possible disconnections followed less than a week after Eskom held back from pulling the plug on the City of Matlosana local municipality, in the North West, after an eleventh-hour settlement.

The municipality, which includes the towns of Klerksdorp and Jouberton, made significant part-payments on the arrear debt, which stood at R91.8-million on February 7, and also committed to a payment agreement to settle the outstanding balance.

Eskom also confirmed that it had issued Matjhabeng local municipality, in the Free State, which encompassed the gold mining town of Welkom, with a notice of disconnection on February 26. A disconnection date of April 10 was set, unless the R145-million in arrear debt was settled.

The utility revealed that it was currently providing the National Treasury with comprehensive monthly reports on all arrear municipal debt, while senior management was also working closely with provincial treasuries to manage the financial recovery process.

Various reasons were being offered as to why a number of municipalities had stopped paying their monthly Eskom accounts, including the fact that monthly municipal electricity accounts had increased proportionately along with electricity prices.

About 40% of Eskom’s total sales were to municipalities, which on-sold the electricity to households and businesses in their areas of supply.

In the event of a defaulting municipality failing to agree to a payment arrangement, or defaulting on a payment agreement, Eskom initiated a disconnection process in line with the Promotion of Administrative Justice Act.

A defaulting municipality was informed in writing to settle the debt within 14 days. However, if a municipality did not settle the arrears in full and/or did not enter into a payment agreement, the municipality’s customers were then informed that supply would be disconnected after 30 days.

SOURCE: http://www.engineeringnews.co.za/article/eskom-issues-disconnection-notices-as-municipal-arrears-pile-up-2013-03-19

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