Back to square one

Eskom is not interested in any agreement with Emalahleni Local Municipality and plans to flick the switch.
This bold move comes after the municipality again did not honour its agreement with the utility giant.

Eskom said they will disconnect electricity supply on May 3.
Emalahleni owes the power utility R529 667 830.72. Some of this money has been outstanding since January 2012.

“We have paid our supplementary accounts, which are R9.5 million, up to date this month. There are only R25 million in arrears outstanding for Ga-Nala and a further R15 million towards our main account. We need R30 million to bring our current main account up to date and then an additional R43 million towards the new account received for our utilisation during January,” the Municipal Manager Mr Theo van Vuuren outlined.

“Eskom dismissed our extension request and now over the next two months a process to reach some sort of new arrangement or possible different position will unfold,” he said.

Van Vuuren said there are two reasons why the municipality finds it hard to catch up on its debt with Eskom.

“Too little revenue is being received by the municipality to cover all the Eskom cost. There is a 40% gap between what we get and what we pay to Eskom monthly.”

Secondly he blames the billing and tariff policy by Eskom.

“The billing is burdening the municipalities unfavourably. In this respect interest is charged after two weeks after issuing the invoices, heavy penalties are paid for exceeding demand limits at the substations whilst to upgrade substations and inlet stations are either not allowed or goes with huge upfront payments, making it very difficult to do. Interest on accounts in arrears are also far above prime and more than half of arrears with Eskom at this stage are in respect of interest and penalties. It is also common cause that bigger clients, buying in bulk, mainly industries, are directly supplied by Eskom in our area of jurisdiction whilst especially problematic service areas and difficult and costly areas to administer are left to the municipality,” he let off steam.

“However, despite being on the wrong side of the knife and receiving end from both Eskom and the public in this situation, I do understand Eskom’s approach from a business perspective. They are also under severe strain and should receive their monies they are fairly entitled to for services rendered. We are in arrears at this stage. The size of arrears is influenced by the factors as mentioned above and I still hope that through the intervention by government, we may get a more fair dispensation. Not withstanding that, we do need to increase our revenue and get back to a more positive position.”

Although there have been and still are many initiatives including replacement of meters, creating more energy efficiency and improving the billing and credit control, those who are in arrears or who are avoiding payments especially illegal utilisation of electricity, need to be brought under the income net.

“It has no value to accuse, blame and shame the municipality or the community for the situation. It is now time for action and specifically intensified initiatives to resolve the current arrears toward Eskom but even more importantly, to ensure we become financially sustainable with sufficient funds for development and service delivery, to allow us to restore this city, is more important,” he said.

Operation Betala was launched last week.

Areas will be visited without prior notice and land use and building control, state of infrastructure, services and accounts, will be verified by a technical team including staff from all relevant directorates. Within the boundaries of applicable laws and by-laws notices and or fines will be issued. The intention is to get the basics right again.
Further debt collective measures are also being introduced to recover part of the R1.8 billion being owed to the municipality. More than 20 000 municipal account holders owe the municipality money. The outstanding debt from businesses and households are now fast approaching R2 million. In addition, state entities owe the municipality close to R30 million. Schools owe nearly R10 million.

Since May last year R814 million was paid to Eskom.

In the municipal ranks the sudden resignation of the Chief Financial Officer (CFO), Mr Thabo Maake, two weeks ago raised a few eyebrows. Van Vuuren did not provide more details on this except to say that the CFO resigned for personal reasons. Maake was appointed as acting CFO in May last year and took the seat as CFO in November. His deputy, Mr Abraham Mohgale is now holding the reins in the financial office.

Zita Goldswain
Assistant Editor

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