Eskom stuck between rock and hard place

Komani firms plead with court to prevent switchoff amid R270m debt

Eskom is damned if it does and damned if it doesn’t cut off electricity to Enoch Mgijima municipality, which owes it more than a quarter of a billion rand.

Though empowered by legislation to cut off supply to defaulters, its decision is required to be rational.

Businesses in the region say Eskom’s latest attempt to force the broke municipality to cough up by interrupting supply will destroy the economy of the region, wrecking the municipality’s collection base and any future chance of it ever being able to pay its catastrophic R270m electricity debt.

This, they argued in the high court in Makhanda on Thursday, was the polar opposite of a rational decision.

The Border-Kei Chamber of Commerce and several businesses, including Twizza, Crickley Dairy, Farmhouse Frozen Foods and Shell Ultra City, are seeking to urgently interdict Eskom’s latest planned attempts to ration the municipality’s supply.

In mid-December these business will ask the high court to issue a structural interdict against the municipality which will, among other things, force it to ring-fence all electricity payments made to it by businesses and ratepayers to be paid directly to Eskom.

The businesses asked high court judge Gerald Bloem to interdict Eskom from proceeding with the blackouts pending the outcome of that structural interdict.

But Eskom ’ s counsel, advocate Sydwell Shangisa, argued that prohibiting Eskom from carrying out its duty to cut off defaulters was forcing the electricity supplier into a deeper financial black hole.

He said the businesses themselves had acknowledged the municipality was insolvent and obtaining a structural interdict against it to try to force it to pay Eskom was self-defeating.

He also pointed out that the municipality was a serial defaulter which had repeatedly breached payment plans painstakingly put in place by Eskom to assist it to meet its obligations.

The last payment plan in November 2018 had been made an order of court.

He argued the municipality was in serial breach of its constitutional obligations to its citizens and its contractual obligations to Eskom, as well as the court order.

He questioned not only whether another order of court compelling it to pay Eskom would make any difference but whether a structural interdict against any insolvent body could be effective.

“The elephant in the room, which no-one wants to acknowledge, is that [Eskom’s] ability to generate electricity is dependent on its ability to collect revenue.”

Cutting supply was the only means Eskom had to bring pressure to bear to force payment.

But advocate Torquil Paterson, for the businesses, said this would be self-defeating.

The defunct municipality’s financial situation was already dire and cutting off electricity would destroy the businesses the people who supplied the municipality with an income.

It would then never be able to meet its obligations to Eskom.

It was argued that cutting off electricity to the region would result in a “human catastrophe”.

Bloem indicated he would make his decision on Monday with reasons to follow soon after that.

Eskom gave notice it intended rationing electricity to the municipality from Tuesday.

Paterson was instructed by Wheeldon, Rushmere & Cole and Shangisa by Nettelton Attorneys.

Despite being cited as a respondent in the papers, and the disastrous potential outcome for the municipality if its electricity is cut, it did not put in an appearance in court.