Powers cuts for defaulting towns
POWER outages in municipalities that still owe vast sums to power utility Eskom were set to begin today.
The 22 municipalities in the Northern Cape, Eastern Cape, Free State, North West and Mpumalanga will have interruptions in their power supply until the municipalities make plans to pay back the money owed.
The power utility said yesterday it had not reached the decision to do these scheduled power cuts lightly.
“Eskom is in a uniquely invidious position, locked between a deteriorating financial position and running foul of the PFMA (Public Finance Management Act). Relevant laws and standards compel us to collect overdue debt and failure to comply has dire consequence for the entity,” said Eskom interim chief executive Matshela Koko.
The utility said that as an incentive for municipalities to settle their debts, it had offered the suppression of future interest to them.
The power interruptions will take place between 6am to 8am and 5pm to 7.30pm on weekdays and between 8.30am to 11am and 3pm to 5.30pm during weekends.
Eskom has, however, said the power interruptions would be suspended if municipalities met three requirements: negotiate a cash payment; provide a written promise in the form of a council resolution that accounts will be honoured; and submit a payment plan for the arrears supported by a council resolution.
AfriForum, which had applied to have the power interruptions suspended but lost this challenge in the high court in Pretoria earlier this month, said they would be applying to the National Energy Regulator of South Africa to have the licences of these municipalities revoked in order for individuals in these municipalities to buy their power directly from Eskom.
The group’s Marcus Pawson said the power interruptions would undermine the growth of small- and medium-size businesses.
“Power interruptions will hinder economic growth. This has the potential to economically destroy South Africa’s rural towns and eliminate the prosperity of people in these areas,” he said.
Koko noted: “Municipalities contribute almost 42 percent of Eskom’s total sales and 41 percent of Eskom’s revenue annually. Non-payment of accounts has a significant impact on Eskom’s cash flow. If Eskom cannot collect its debt, it essentially spells the death knell of Eskom.”
Eskom’s coal-burning power station at Sasolburg in the Free State. The power utility is owed billions of rand by municipalities.