Several Western Cape towns could be plunged into darkness after Eskom threatened to cut their electricity supply if their municipalities do not settle unpaid bills amounting to R26m.
But in a surprise twist, a confidential report has revealed that big businesses not paying in full for the electricity they use in the Kannaland municipality – which owes the lion’s share of the accumulated Eskom arrears at R20m – could be a major contributing factor.
The electricity meter auditing reports of that municipality – it includes Ladismith, Calitzdorp, Zoar and Vanwyksdorp – in particular blames a dairy giant, a cheese factory, a wine cellar, and even a government department.
Also implicated is the Cederberg municipality, which includes the West Coast towns of Citrusdal, Clanwilliam, Graafwater and Lamberts Bay, which owes R6m.
In a letter dated May 28, addressed to Premier Helen Zille, Eskom’s acting chief executive Collin Matjila warns that the municipal arrears debt had escalated to an unacceptable level of R26m as at the end of April.
Asking for assistance from the provincial government, Matjila wrote: “We will continue to engage these municipalities, and require your assistance in order to resolve the municipal arrears debt.”
Kannaland is led by the Independent Civic Organisation of South Africa (Icosa) in coalition with the ANC, while Cederberg is an ANC-run municipality.
According to Matjila’s letter, Eskom was avoiding blacking out the towns by asking the municipalities to honour the debt (less than 30 days) up to mid-November 2012, then settle the arrears debt (greater than 30 days) up to December 3, 2012.
Municipalities that couldn’t pay should pay at least 80 percent of the arrears, then enter into a minimum monthly payment agreement of one-third of the outstanding arrears, for the period January to March last year.
However, this had not happened.
It has now emerged from the confidential Kannaland reports that the municipality is struggling to ensure people, especially big businesses, pay in full for power.
According to the report, the financial losses involving electricity and water consumption amount to more than R10m. Other than the wine cellar, cheese factory, dairy giant and government departments, it fingers supermarkets, taverns and an old-age home.
The problem was exacerbated by meter readers struggling to get access to meters due to security, aggressive dogs and locked gates.
Another report to Kannaland’s mayoral committee, dated November last year, showed that at least one big business opted to enter into a settlement agreement with the municipality. About half of the others, however, refused to pay.
An insider said these cases were heading to court. Asked to comment, Kannaland municipal manager Morné Hoogbaard told Weekend Argus the matter was the result of a less-than-prudent management practice inherited by the current administration.
“A combination of equivocal pricing and impugnable recovery, and dubitable consumer behaviour, combined to present an unenviable problem being decidedly addressed by the administration and its advisers,” he said.
Hoogbaard added that the outstanding balance and a counter claim by the municipality were both being considered in a spirit of transparency among all the parties, including the administration, Eskom, the Western Cape government, consumers and service providers.
“We have faithfully been paying our monthly accounts with Eskom, and are now waiting for finalisation of our dispute over the arrears,” he said.
He refused to provide details of the defaulters, especially big business, mentioned in the report, saying it was a confidential matter.
Cederberg joined the Kannaland municipality in expressing surprise at Eskom’s appeal to Zille, claiming they were involved in ongoing talks with Eskom.
Eskom’s approach to the provincial government is in terms of section 139 of the constitution, which says that “when a municipality cannot or does not fulfil an executive obligation in terms of legislation, the relevant provincial executive may intervene by taking any appropriate steps to ensure fulfilment of the obligation.”
Eskom’s provincial spokeswoman, Jolene Henn, said it was legally bound by the Public Finance and Management Act to collect all revenue due to it, and could not allow debt levels to go unchecked.
“In order to comply with the act, Eskom has applied its revenue management policies and procedures, and engaged with the municipalities, taking into consideration proposed payment plans.”
She said the electricity utility was mindful of the consequences of electricity disruptions for households and businesses and would therefore continue to engage with defaulting municipalities to resolve the arrears debt.
But Henn warned, “Eskom reserves its rights, including the right to disconnect the supply of electricity to defaulting municipalities in line with the Promotion of Administrative and Justice Act No 3 of 2000.”
She stressed that this would, however, be a last resort.
Of the letter to Zille, Henn said they had had continual stakeholder meetings with the provincial government, not only relating to defaulters but also on how to improve overall services.
Confirming the letter to the premier, Local Government MEC Anton Bredell said his department was meeting the Treasury to discuss the issue, and would respond once the meeting had been finalised.
Ian Kenned, Cederberg’s municipal manager, said they regularly paid Eskom, and had been meeting Eskom teams on an ongoing basis.
“There is a current dispute regarding the rural tariff system Eskom is using to charge us. The arrears in question are linked to the previous year, and the money owed is the equivalent of one month’s Eskom account,” he said.