Eskom has announced plans to interrupt electricity supply to municipalities with large outstanding debts as part of efforts to address rising municipal arrears. The utility said it has begun issuing notices in terms of the Promotion of Administrative Justice Act (PAJA) and has initiated a public consultation process as part of this initiative.
Eskom said the PAJA process will provide affected municipalities with an opportunity to make representations before any further action is considered. According to the utility, municipal debt has already exceeded around R110 billion with 14 municipalities selected for non-payment interventions in the past 18 months. Eskom said these municipalities have also failed to meet the conditions of National Treasury’s municipal debt relief programme and pose a significant financial risk to the utility.
The development follows the Budget Speech by Finance Minister Enoch Godongwana on February 25 when he raised similar concerns about municipal finances. Godongwana noted that 63% of municipalities remain in financial distress and said the failure to ring-fence revenue collected for specific services contributed to rising municipal debt.
The municipal debt relief programme ring-fences historic electricity debt and suppresses related interest in order to create financial space for municipalities to meet their ongoing payment obligations.
Eskom said the PAJA process is part of its efforts to address rising arrears while ensuring the stability of the electricity supply system. The utility described the interruption of electricity supply as a credit control measure.
“We have to address rising arrear debt to protect the operational stability we have restored and to deliver on our developmental mandate,” said Agnes Mlambo, Eskom’s Acting Group Executive for Distribution.
Eskom said it recognises that communities may be affected by potential supply interruptions but maintained that the measures are necessary to compel municipalities to take corrective action. The utility urged municipalities to regularise their accounts, stating that supplying electricity without payment is unsustainable in the long term.
Should municipalities fail to take corrective action, Eskom warned that it may proceed with credit control measures, including interrupting electricity supply at predetermined times, as permitted by law.
If payment defaults persist, the utility said it may also be compelled to limit supply to levels equivalent to the payments received.
