Two municipalities with overdue accounts are being forced to pay Eskom millions in legal costs, on top of the millions in arrears, after losing their disputes in court.
The power supplier received favourable judgment against the Letsemeng Municipality in the Free State and the City of Matlosana Local Municipality in the North West.
Matlosana’s case was heard in the North Gauteng High Court on 5 July, while that of Letsemeng was in the Constitutional Court the next day.
The embattled municipalities’ applications to stop Eskom from cutting electricity supply were dismissed with costs.
The entity served notices of cuts to the municipalities in 2020, owing to huge debt in overdue accounts after they had failed to pay. The municipalities repeatedly breached several internal remedial actions, such as the Intergovernmental Framework Agreement signed with Eskom.
Matlosana’s arrears stood at R422,4 million in January 2020 and has now reached R1,054 million. Letsemeng’s arrears totalled R41,1 million and has risen to R119,7 million during the legal battle which took two and a half years.
After the Free State High Court granted Letsemeng an interdict preventing Eskom from cutting electricity on 25 February 2020, the power supplier lodged an appeal in the Supreme Court of Appeal in Bloemfontein. Eskom received a favourable judgement on 14 March this year. However, the ANC-governed Letsemeng Municipality approached the Constitutional Court, which dismissed the case with cost.
Lucas Mkhwane, municipal manager of Letsemeng, stated that the municipality had resorted to legal action because Eskom had turned down a plea for an extension of the date of payment of R5 million and assurance by the Provincial Treasury for payment after the amount was gazetted by the Provincial Treasury. He also disputed Eskom’s billing.
Eskoms has expressed relief with both favourable judgments, which conclude lengthy legal battles since 2020.
“Both judgments are unambiguous on the obligation of the municipalities to service their Eskom current accounts and pay arrears,” said Agnes Mlambo, general manager at Eskom.
“It is incredible that some municipalities are willing to spend millions on legal costs instead of using the funds to pay for electricity services delivered by Eskom. This proves the unwillingness of these municipalities to do the right thing, which is to fulfil their legal duties by paying Eskom for electricity supplied.
“These municipalities collect revenue from electricity sales at a mark-up from their customers, but do not pass the revenue on to Eskom. In the meantime, Eskom must cover the costs of diesel, coal, salaries and other expenses to keep supplying electricity to these non-paying municipalities,” said Mlambo.
She also explained the situation regarding the Intergovernmental Framework Agreement.
“The process of that framework is dictated to by the act with the same name. It calls for intergovernmental engagements, which we had over the years with no results. Hence our arguments in court that ended with the order – as a last resort.”
