Eskom suspends Emfuleni asset attachments, but steps up debt collection

Eskom has suspended the process of attaching Emfuleni Municipality’s assets, after commitment from the municipality that it will pay R50 million of its R1.8 billion historical debt by the end of business today. The municipality has also promised to pay its current monthly electricity account of about R183 million per month on time, says Eskom CEO Andre de Ruyter.

On Tuesday morning, De Ruyter met with the Gauteng MEC for Human Settlements, Urban Planning and CoGTA, Lebogang Maile, as well as mayors from all municipalities in Gauteng, to address the issue of how the power utility will collect outstanding debt owed to it in the province. Gauteng municipalities owe Eskom R3.8 billion, R2.6 billion of which is overdue, and the bulk of which owed by Emfuleni.

This amount excludes the Soweto debt, however. De Ruyter said the issue of Soweto debt was discussed in the meeting, and Eskom is conducting exercises to disconnect people who don’t pay.

"We understand that this is a very challenging situation and we are trying to proceed with as much sensitivity to residents who live in that area and do pay their accounts. But unfortunately, in some areas, payment rates are really low and we therefore have to intervene to establish a culture of payment," said De Ruyter about Soweto.

The only municipalities that aren’t owing Eskom in Gauteng are Ekurhuleni, the City of Tshwane, Midvaal and Lesedi. The City of Johannesburg and Mogale’s current accounts are behind by a month or two.

Around the country, municipalities now owe Eskom in excess of R29 billion, said De Ruyter. This means municipalities have accumulated at least an additional R2.6 billion of debt owed to Eskom since the power utility last told parliament in October 2019 that it was struggling to collect on outstanding R26.4 billion from municipalities.

"If current non-payment rates are not addressed, this amount will become an even bigger concern for Eskom," said De Ruyter.

As for Emfuleni, the CEO said the municipality has given Eskom assurance that it will be paying its electricity account on a monthly basis but if the municipality reneges on that agreement, or doesn’t deliver the R50 million rand cash amount it promised, Eskom reserves its right to continue with the attachments.

'We pay interest, we levy interest'

The suspension of the attachment of assets was also based on the condition that Emfuleni presents a practical and sustainable payment plan for its remaining historical debt to Eskom, one that will give the power utility "adequate security" to Eskom. Maile, who last week criticised Eskom for the way it handled the Emfuleni issue, tried to negotiate for the municipality’s debt to be interest-free, but De Ruyter said the utility doesn’t receive interest-free loans from its lenders and therefore cannot be expected to extend that leniency.

"Eskom itself carries a significant debt burden. We pay interest to our lenders and that is why we levy interest on overdue accounts. We intend to continue applying interest. It will be part of discussion going forward. We have not received any final indication as to what interest rate would be acceptable," said De Ruyter, adding that Eskom and Maile’s department will still have more discussions.

He said Eskom was not taking a hard-line approach to non-paying municipalities, but like any other business that renders a service, Eskom expects payment.

"If you don’t pay your DStv account, you no longer receive a signal, and we want to follow exactly the same principle when it comes to electricity."