Business Day

Presidency ‘will not intervene in power cuts’

• Ramaphosa will not intervene as businesses urge him to stop Eskom from plunging municipali­ties into darkness

- Carol Paton Writer at Large

President Cyril Ramaphosa’s office says it cannot step in to prevent Eskom from cutting off the electricit­y of dozens of businesses located in failing municipali­ties.

President Cyril Ramaphosa’s office says it cannot step in to prevent power utility Eskom from cutting off the electricit­y of dozens of businesses located in failing municipali­ties.

Eskom is poised to cut off electricit­y in at least five municipali­ties, putting thousands of jobs at stake and bringing basic services such as sewage reticulati­on to a halt. Several firms have resorted to the courts to stop the cut-offs, with five court applicatio­ns in the works and another dispute in mediation.

Eskom is owed R13.6bn by defaulting municipali­ties, an amount that increased by 30% over the past year. The power utility itself is in a battle for survival with a huge debt it is unable to service from its operating revenue and tariffs that are not cost-reflective.

In one of the worst cases of municipal arrears debt, in Maluti-a-Phofung — which includes the Free State town of Harrismith — businesses have named Ramaphosa as a respondent in an applicatio­n, appealing to the Free State division of the high court for an order that will compel him to intervene.

Maluti-a-Phofung owes Eskom R2.7bn and has not paid its Eskom account since 2011.

The applicants, who include the Harrismith Business Forum, Boxmore Plastics, Nestle, 11 other businesses and a private hospital, argue that in terms of the constituti­on, the provincial government has failed to intervene effectivel­y to assist the municipali­ty. It argues that the national executive now has a responsibi­lity to intervene.

In a replying affidavit, director general in the presidency Cassius Lubisi says a threshold for an interventi­on by the national executive has not been reached. He says this can only take place if it were decisively determined that an interventi­on in the municipali­ty by the Free State provincial government had failed to do so.

The provincial government took over various functions of the municipali­ty under section 139(b) of the constituti­on six months ago.

This interventi­on is still “in its infancy and has not been given an opportunit­y to yield tangible results”, says Lubisi.

The affidavit also spells out how an interminis­terial task team, headed by the minister of co-operative governance and traditiona­l affairs, has been dealing with the matter of municipal debt to the state power utility for the past 18 months.

An advisory panel was establishe­d in October 2017 to assist the task team, whose work “was ongoing”, it says.

In the period since the task team was establishe­d, business in at least five municipali­ties have been faced with cut-offs and have turned to the courts.

Affected businesses include Bridgeston­e Tyres in Madibeng, which includes Brits; Astral Foods in Lekwa, which includes Standerton; Cape Gate and African Cables in Emfuleni in the Vaal Triangle; farming operations represente­d by Afgri in the Free State; and property company Resilient in Emalahleni, which includes Witbank.

Businesses in Thaba Chweu, which includes the Mpumalanga town of Sabie, were in court on Monday and Tuesday to support an applicatio­n by the Sabie Chamber of Commerce and two others.

In its annual report published in July, Eskom said municipal arrears debt grew “exponentia­lly” over the past year and was listed as one of the biggest risks the company faced.

In a responding affidavit in the Maluti-a-Phofung matter, Eskom argues that in terms of the law it has a supply agreement with the municipali­ty alone — and not the businesses concerned — and is entitled to cut off services when a customer does not pay.

The Eskom annual report indicates that the company expects municipal arrears debt to deteriorat­e.

“Our view is that, unless the root causes identified are addressed, the payment challenges in municipali­ties will not improve significan­tly,” the company says.

 ??  ?? Cyril Ramaphosa
Cyril Ramaphosa
 ?? /Ntswe Mokoena ?? Not intervenin­g: President Cyril Ramaphosa says businesses must wait for due process as the interminis­terial task team is working to find solutions to the debt burden Eskom is facing from municipali­ties defaulting on their accounts.
/Ntswe Mokoena Not intervenin­g: President Cyril Ramaphosa says businesses must wait for due process as the interminis­terial task team is working to find solutions to the debt burden Eskom is facing from municipali­ties defaulting on their accounts.

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