The Letsemeng Local Municipality in the Xhariep district is being forced to pay Eskom millions in legal costs, on top of the millions in arrears on its account, after losing a dispute in the Constitutional Court on Wednesday (06/07).
The costs pertain to hearings in the Free State High Court, the Supreme Court of Appeal in Bloemfontein and the Constitutional Court.
Letsemeng’s arrears initially totalled R41,1 million and has risen to R119,7 million during a prolonged dispute of two and a half years.
The current account is R5,5 million.
The legal saga started after Eskom served a notice that power supply would be cut in 2020, owing to the municipality’s failure to pay the overdue account.
This was also due to the municipality repeatedly breaching internal remedial actions, such as the Intergovernmental Relations Framework (IRF) agreement signed with Eskom.
The Free State High Court granted Letsemeng an interdict preventing Eskom from cutting electricity supply on 25 February 2020. Lucas Mkhwane, municipal manager, stated that the municipality had resorted to legal action because Eskom had turned down a plea for an extension of the date of payment for the 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.
The power supplier then lodged a successful appeal in the Supreme Court of Appeal. Judgement was handed down on 14 March.
However, the aggrieved ANC-governed municipality approached the Constitutional Court, which dismissed the case with cost.
The unfavourable judgement compels the municipality to pay current accounts and arrears.
“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,” said Agnes Mlambo, general manager at Eskom.
“The municipality collects revenue from electricity sales at a mark-up from its customers, but does 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.”
Mlambo also explained the situation regarding the IRF 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.”
According to Eskom, at the end of May it was owed approximately R16 billion in overdue debt by 18 defaulting municipalities in the province. The coalition-governed Metsimaholo stands out as the only one of 19 municipalities not indebted to Eskom.
