Spark debt co-operation

Overdue municipal debt to Eskom now totals more than R10bn, which amounts to about 42% of total electricity sales and 41% of Eskom’s annual revenues. Uncertainty regarding Eskom’s liquidity position and future cash flows was a major contributor to the ratings agencies downgrading Eskom in December 2016.

Since the commencement of the Promotion of Administrative Justice Act process to recover the arrear amount we have seen commendable co-operation among stakeholders; we have been receiving part payments and signing payment agreements. Eskom is a national asset, and it rests on the shoulders of each citizen of this country to ensure its sustainability.

Eskom has engaged all relevant stakeholders as part of the process, seeking to entice municipalities to pay what they owe through a “carrot” of suppressed interest on the overdue amount.

While the relevant legislation and contractual agreements permit us to withdraw electricity supplies completely from nonpaying municipalities, we opted for a softer approach of interruptions for a few pre-announced hours daily.

Judge Hans Fabricius of the High Court in Pretoria agreed with us when he dismissed AfriForum’s application challenging this approach, understanding that Eskom’s position must be considered within the context of the broader economy.

Interruptions stem from our duty of care, a responsibility grounded in our acute appreciation of SA’s present circumstances and the need to reconcile our past with the desired future. However, Eskom’s ability to supply electricity will be rendered obsolete if nonpayment for electricity by municipalities escalates. This will make insolvency inevitable, which will in turn impose huge costs on government and, by extension, the citizens of SA.

I urge all the defaulting municipalities to expeditiously honour their outstanding amounts as a contribution to the creation of a sustainable future for SA.

Dr Baldwin Ngubane

Chairman, Eskom