Pretoria - The long-running battle between Eskom and the Emfuleni Municipality, which owes the power utility billions in electricity debts, has come to a head in the Gauteng High Court, Pretoria.
A full Bench (three judges) has now ordered that consumers in this municipality could pay Eskom directly for the power they used. The court also gave the municipality six months to draw up a new settlement to pay off its R3.5 billion debt.
Eskom has been battling since 2018 for this municipality to pay its debts.
Emfuleni is paid by the consumers, but it is not paying its debts to Eskom.
Eskom turned to court to hold the municipality and its municipal manager in contempt of the full court’s November 2018 order.
Eskom successfully argued that end-users in Emfuleni should pay Eskom directly, with Eskom then paying Emfuleni’s portion back to it. Eskom also complained that the municipality refused to adhere to the load shedding schedules.
Judge Selby Baqwa, who wrote the judgment, commented on Eskom being hampered in providing services to the rest of the country as Emfuleni did not comply with requests to regulate electricity as part of load shedding.
“When Eskom needs to shed the load, it requests Emfuleni to do so. Emfuleni responds that it is not in a position to do so as it lacks the capacity to switch off the power. The effect of a municipality failing or refusing to co-operate with Eskom to ensure load shedding poses a potential collapse of the entire national grid. The threat, says Eskom, is a national blackout.”
Judge Baqwa said it was regrettable when the courts become preoccupied with cases which in terms of the Constitution ought to be resolved by state organs. “There seems to be an unwillingness, ineptitude, lack of capacity or inability to engage meaningfully to bring about effective solutions to disputes concerning the provision of/or payment for electricity.
“The judiciary has also had to deal with cases of omnipresent rampant corruption and maladministration. When the issues become deadlocked, the regrettable consequence is that it is citizens and businesses that suffer the inevitable failures with regard to delivery of basic services such as water and electricity,” he said.
The judge added that the situation had manifested itself in a long-running dispute between Eskom and numerous municipalities such as Emfuleni, alleged not to be paying Eskom for the bulk electricity it supplies to it.
Judge Baqwa said this matter was not only about Emfuleni’s failures to pass on Eskom’s portion of electricity bills, but also about the failures of organs of state to act in terms of the Constitution which obliges all spheres of government “to make every reasonable effort to settle the dispute by means of mechanisms and procedures provided for that purpose”.
Emfuleni’s financial statements and published reports before the court demonstrated Emfuleni’s inept management of its financial affairs, the judge said. Its revenue generated from electricity sales in the 2019 financial year, increased by R450 million while its equitable share from government increased by some R70m for the last three years. Emfuleni had collected R4.5 billion from electricity customers at a collection rate of about 90%.
“Sadly, though, Emfuleni’s financial statements show that its irregular expenditure amounted to R1 125 676 432 and its fruitless and wasteful expenditure to R486 097 380.”
The judge said Emfuleni was not only being mismanaged, but also failed to keep its electricity business separate from its other affairs. Nersa failed to enforce this obligation.
“There is no dispute that Emfuleni owes Eskom. The difficulty is finding adequate language to describe the scale of the debt… In this case, the debt was R2bn when the case commenced and increased by more than R1.5bn during litigation… The real challenge in this case is the astronomical scale of debt.”
Emfuleni conceded it did not have billions to repay its debt and had been “beseeched by lack of financial discipline” and “maladministration”. Emfuleni simply said it would not be able to repay this debt.
“The scale of the debt has given rise to a state of disaster so grand that a money order will not be appropriate relief. mfuleni has yet to confront the state of the disaster it has created.”
The court ordered that Emfuleni appoint Eskom as its agent to perform all functions relating to Emfuleni’s electricity business.
Pretoria News