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AfriBusiness and AfriForum have brought a joint court application against Eskom to force the power utility to follow the correct procedures regarding the collection of municipal debt. This is to ensure that end-users, whose electricity accounts are paid in full, are protected against unlawful power cuts.
A series of other parties, mostly businesses that are negatively impacted by such power cuts, were also heard by the North Gauteng High Court.
“Municipal debt owed to Eskom increased to over R15 billion at the end of 2016. Poor municipal administration will only lead to an increase in this amount. Power sold directly to end-users, could be the solution that ensures that Eskom receives payment for the power it supplies. Astral Foods, one of the businesses forming part of the joint proceedings, has for example reached an agreement with Eskom to buy electricity directly from the power utility to cut out the municipality as the defaulting middleman,” says Morné Mostert, AfriForum’s Head of Local Government Affairs.
The purpose of the court application is to force Eskom to follow the prescribed procedures before simply cutting off a municipality’s power. In January 2017, several municipalities were given notice that the power supply to their districts would be cut off due to defaulting payments. This would have left innocent, paying consumers in the dark. Although many municipalities have reached repayment agreements with Eskom, there is still a risk that Eskom could employ the same tactic should municipalities default thereon.
“Such power cuts are not only detrimental to the public, but also to businesses that, in many cases, cannot function or generate a profit without power. If this continues for too long, the financial damage suffered by businesses may be so severe that it leads to personnel cuts or forcing them to close their business. The economic impact is far reaching, but it seems as if Eskom does not consider the potential damage that these businesses could suffer,” says Armand Greyling, Law and Policy Analyst at AfriBusiness.
Judgement has been reserved. The court will then give clarity on how Eskom may proceed to collect debt, as well as which legal procedures must be followed before municipalities’ power can be cut.