Look­ing for light on Eskom threat

Grocott's Mail - - MAKANA VOICES -

Eskom threats (again)

Many of you will have seen that Eskom have pub­lished a Le­gal No­tice in Thurs­day 12 October EP Her­ald an­nounc­ing pro­posed ‘In­ter­rup­tion of Bulk Elec­tric­ity Sup­ply to Makana Lo­cal Mu­nic­i­pal­ity.’ GRA has been mak­ing en­quiries at Makana on Fri­day and Mon­day to get clar­i­fi­ca­tion, and ask­ing Makana to make an ex­plana­tory state­ment.

The Eskom No­tice is caus­ing worry for res­i­dents and dam­age to busi­ness con­fi­dence which is al­ready frag­ile. Com­mu­ni­ca­tion by the Makana Coun­cil would cost noth­ing, and it would help save jobs (busi­nesses have to make de­ci­sions whether Makana is a good place to in­vest).

Coun­cil­lors and staff may be try­ing to sat­isfy Eskom, but harm is be­ing done by not hav­ing the con­fi­dence to be open and trans­par­ent with the pub­lic. Iron­i­cally, this ap­proach makes wrong-do­ing look more plau­si­ble as it feeds spec­u­la­tion and ru­mour.

As with other is­sues such as wa­ter out­ages, peo­ple want to know where they stand, how long the wa­ter out­age might last and what is the cause. Mem­bers tell GRA how grate­ful they are for be­ing kept in­formed, even though GRA can­not nec­es­sar­ily speed up the re­pairs.

Equally, we need to be in­formed whether there is a high risk of elec­tric­ity out­ages in Gra­ham­stown from 8 De­cem- ber as in­di­cated in the Eskom no­tice.

What is the sit­u­a­tion?

At the mo­ment, from the in­for­ma­tion avail­able to GRA, we would say that this Eskom threat is a tac­tic to en­sure that next month Makana pays over all of its Eq­ui­table Share grant, about R30 mil­lion, straight to Eskom. In other words, we do not be­lieve there is a sig­nif­i­cant risk that Makana will be sub­ject to elec­tric­ity in­ter­rup­tions.

On the other hand GRA will sub­mit a re­sponse to Eskom as ad­ver­tised below. You can see our let­ter re­spond­ing to the last threat in Jan­uary 2017 at: http://gra­ham­stown­res­i­dentsas­so­ci­a­tion. co. za/ wp­con­tent/ up­loads/ 2016/ 04/ EskomLet­ter11Jan17.pdf The clos­ing date for com­ments is close of busi­ness on 16 Novem­ber. We will get more in­for­ma­tion to you as soon as rel­e­vant of­fi­cials give us more in­for­ma­tion. Even bet­ter, we hope Makana will make a state­ment very soon.

Back­ground In­for­ma­tion

As you know Makana have been highly in­debted to Eskom for some years. The last big crunch came around De­cem­ber 2016 and a new pay­ment plan was agreed at the start of 2017. The agree­ment ba­si­cally meant that Makana must pay the cur­rent ac­count each month and use a lump of Eq­ui­table Share grant each quar­ter to pay off the R55m arears over a pe­riod of about three years.

Only three months into the plan, by March 2017 Makana started de­fault­ing again.

In June Eskom made warn­ings as the debt had ex­ploded to over R68m. An emer­gency meet­ing with Eskom in East Lon­don agreed an in­terim so­lu­tion that Makana should pay al­most all its Eq­ui­table Share grant to Eskom in July and R5m per month (against a vari­able monthly bill that peaks in win­ter around R14m and falls to about R8m in sum­mer months). Makana would then catch up again by us­ing the Novem­ber Eq­ui­table Share grant.

Hav­ing made this agree­ment, the R33m Eq­ui­table Share grant was paid in July, but not the agreed monthly R5m pay­ment for July or Au­gust. In Septem­ber R5m was paid, and a fur­ther R8m was paid on 6 October (pre­sum­ably to cover the non-pay­ment in July/ Au­gust). We will see whether Makana will make the October pay­ment now that Eskom has is­sued this no­tice.

Ear­lier this year GRA spoke at length with a se­nior man­ager at Eskom be­cause it is obvi- ous that Makana is not mak­ing any progress in par­ing down the debt which re­mains more than R55m. It was ex­plained that Eskom can­not is­sue le­gal pro­ceed­ings un­til it has fol­lowed due process, which in­cludes a pe­riod of in­ter­rupt­ing sup­ply to prove that they have tried ev­ery op­tion to ob­tain pay­ment.

At present the pe­ri­odic threats from Eskom en­sure that Makana has lit­tle choice other than pay­ing over the Eq­ui­table Share grant, which is pro­vided by cen­tral govern­ment for ser­vice de­liv­ery. For now this is suf­fi­cient to stave off the threat of power cuts.

All the while this means that smaller sup­pli­ers go un­paid and ser­vices suf­fer. Makana are at­tempt­ing to solve this im­passe through im­prov­ing rev­enue and debt col­lec­tion, they also aim to sell land, and look at any mea­sures which can raise in­come. What they stead­fastly ig­nore is the need to con­trol ex­pen­di­ture, which is where it is hoped that the sec­onded Mu­nic­i­pal Man­ager promised by MEC for CoGTA will make the nec­es­sary changes.

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