Councils want cut of Eskom ‘billions’

Municipalities facing cutoffs step up fight over direct sales

ESKOM and municipalities are heading for a major clash.

The councils want the power utility to stop supplying electricity directly to consumers. They claim that this costs them billions in revenue and puts a burden on municipal services and ratepayers.

A South African Local Government Association official, Nhlanhla Ngidi, said municipalities wanted Eskom to sign an agreement in areas where it supplied electricity directly so that municipalities could draw revenue from the sale of electricity.

Ngidi said Eskom had so far refused to sign the agreement, so Salga had mandated its president, former Johannesburg mayor Parks Tau, to take the matter up with Minister of Public Enterprises Lynne Brown, Finance Minister Pravin Gordhan and Minister of Cooperative Governance and Traditional Affairs Des van Rooyen.

This is expected to cause further tension between Eskom and the municipalities after Eskom’s threat to interrupt supply to 22 councils that owe the utility altogether R10-billion.

At the centre of the latest dispute between Eskom and the 257 municipalities are billions of rands in revenue that have been lost to municipalities as a result of Eskom providing power directly to consumers.

Ngidi accused Eskom of contravening the Municipal Systems Act, which gives municipalities the sole mandate to distribute electricity.

Eskom provides electricity directly to 47% of consumers, with the remaining 52% households and businesses getting their power from municipalities.

Ngidi said that if Eskom signed service-level agreements with municipalities, it would be recognised as a service provider on behalf of a service authority (a municipality).

Eskom would still get paid, but would levy a surcharge that would be channelled to municipalities.

Ngidi said Eskom had refused to sign the agreement in areas where it directly supplied electricity.

He pointed out that surcharges levied on municipal electricity prices funded municipal services not paid for by residents, including parks, community halls, roads and libraries, among others.

“There are a lot of billions that municipalities are not getting because of the current dispensation,” said Ngidi. “This explains the fight we are in with Eskom. It’s been going on for long, and is now being discussed at a political level.”

Eskom spokesman Khulu Phasiwe conceded that municipalities, not the power utility, were constitutionally empowered to distribute electricity in the country and that small, financially insecure municipalities had approached Eskom for assistance.

Phasiwe said, however, that this did not equate to Eskom taking over the functions and responsibilities of the municipalities.

“Some of the small municipalities have approached Eskom with a view to Eskom helping them to install prepaid meters in their areas.

“Some of these municipalities do not have funds to buy these meters themselves, hence their proposal for Eskom to buy and install them on their behalf.

“This doesn’t equate to [Eskom] taking over the electricity supply from these municipal-

We always complained to Eskom about Soweto. Soweto owes Eskom R6-billion and municipalities owe R10-billion

ities. This merely refers to Eskom installing the prepaid meters and recouping its costs over time,” said Phasiwe.

Ngidi said Eskom’s treatment of smaller municipalities was unfair, considering how it treated Soweto residents.

“We always complained to Eskom about Soweto. Soweto owes Eskom R6-billion and municipalities owe R10-billion, [but] no one is threatening Soweto [residents with electricity interruptions]. Maybe that is something you need to look at.

“We’ve always cried foul, that everyone must be treated fairly,” he said.

The majority of municipalities that were due to have their electricity interrupted have signed payment agreements with Eskom to avert power cuts.

Madibeng local municipality in North West hurriedly paid R40-million to Eskom to stave off power cuts.