South Africa: Non-Payment of Municipal Debt Affect Eskom Liquidity

Eskom says large electricity supply debt racked up by municipalities is negatively affecting its financial performance.

This after the high court in Pretoria handed down a R1.3 billion order against the Emfuleni Municipality for failing to pay its Eskom current account and arrears.

"The overdue debt is impacting negatively on the public utility's liquidity, financial performance and sustainability, leaving the public utility no option but to borrow in order to meet its financial commitments," Eskom said.

According to Eskom, the Emfuleni municipality has failed to pay some of its account "despite the municipality's healthy revenue collection of about 90%" from customers.

"[Eskom] has started with the execution steps against the municipality to recover some of the municipality debt including attaching the local authority's bank accounts and moveable assets. Emfuleni Municipality is currently indebted to Eskom to the amount of R5.3 billion despite several litigations brought by the power utility since March 2018 to get the municipality to service its account," Eskom said.

Furthermore, the power utility said it has served the municipality a summons for non-payment of its R3.4 billion bulk electricity supply bill.

"This resulted in Eskom and the municipality's customers applying to the court to transfer the municipality's electricity distribution license or part thereof to Eskom. This application is to be heard in March 2023 and would set a precedence for municipalities failing to pay their Eskom debt and complying with the Electricity Supply Agreements (ESA)," the power utility said.

Meanwhile, Eskom says stage two load shedding will now be implemented all day, from 9am on Tuesday (today) until further notice.

The power utility had night load shedding on Monday.

"This is necessitated by a breakdown of a Duvha generating unit and a delay in returning to service another Duvha unit. Eskom will provide a further update as soon as any significant changes occur," the power utility said.

This article originally appeared on SAnews.gov.za

Photo: SAnews.gov.za