Johannesburg: Eskom has initiated a public consultation process on its intention to interrupt electricity supply in some municipalities. The power utility explained that the move is aimed at addressing "escalating municipal debt, protect affordability, strengthen financial sustainability and advance sector reform."
According to South African Government News Agency, municipal debt to Eskom has reached some R110 billion, including the Municipal Debt Relief Programme, which is designed to assist struggling municipalities in addressing their debt. Eskom has exhausted all reasonable avenues through the Intergovernmental Relations Framework Act. As a result, the company is in the process of issuing notices in terms of the Promotion of Administrative Justice Act (PAJA), providing affected parties an opportunity to make representations before further action is considered.
Around 14 municipalities have been selected for these consultations because they have not settled their accounts for at least the last 18 months, have not met the conditions of the National Treasury municipal debt relief programme, or pose a significant financial risk to Eskom. Initiating the PAJA process ensures that Eskom complies with legal requirements while taking necessary steps to maintain the stability of the electricity supply system. However, Eskom has not yet announced the names of the municipalities involved.
Eskom encourages all stakeholders to support efforts to resolve the matter and invites written representations or proposals that may assist in achieving a sustainable solution. The utility will determine and communicate the way forward once all representations submitted through the PAJA process have been fully considered.
The electricity supplier has emphasized that while it empathizes with communities that may be affected, it has been left with no option but to initiate this process unless the municipalities urgently regularize their accounts. Eskom explained that supplying electricity without payment is unsustainable, and failure to remit funds collected from customers for electricity services undermines Eskom's financial viability while impacting the delivery of electricity to the relevant communities.
Should the municipalities fail to take corrective action, Eskom will proceed with credit control measures, which may include interrupting electricity supply at predetermined times, as permitted by law. If defaults persist, Eskom will be compelled to limit supply to levels commensurate with payments received.
Agnes Mlambo, Acting Group Executive Distribution, added that addressing rising arrear debt is essential to protect the operational stability and financial discipline restored in the first three years of Eskom's turnaround to deliver on its developmental mandate. Through the turnaround, Eskom aims to enable business to protect and create jobs and support strategic industries to remain competitive, allowing communities to thrive.
Eskom explained that the amounts owed by municipalities make it impossible to delay interventions further. Initiating the PAJA process ensures adherence to necessary legislative requirements while taking steps to protect electricity supply.
The persistent rise in arrears highlights the critical need for Eskom to proceed decisively. The Municipal Debt Relief Programme ring-fences historic electricity debt and suppresses related interest to create financial space for municipalities to meet their ongoing obligations. At least 71 municipalities have been enrolled in the programme, with only 15 consistently meeting the programme conditions.
Throughout the country, municipal debt has surpassed R110 billion, despite the National Treasury's intervention through the municipal debt relief programme aimed at restoring sound financial management. The escalating municipal debt burden also has wide implications for South Africa's electricity reform agenda, designed to enable new entrants to enter the marketplace and delay progress on the legal and operational unbundling of Eskom's Distribution business.