South Africa

CAPITAL DISCONNECTION

City of Tshwane commits to paying R1.6bn debt after Eskom threat to cut power

City of Tshwane commits to paying R1.6bn debt after Eskom threat to cut power
Illustrative image | Sources: Supplied | Wikimedia Nonku-eskom-tshwane

Eskom says that the City of Tshwane owes it R1.6bn despite the city’s unprecedented electricity cut-off spree under #TshwaneYaTima earlier this year.

South Africa’s administrative capital city and the second largest metropole in Gauteng, the City of Tshwane, could soon find itself plunged into darkness after power utility Eskom warned on Tuesday it was considering disconnecting its electricity supply over its R1.6-billion debt.

The move, if implemented, would affect critical functions of the city and its more than 2.7 million residents. The city, however, says that while disappointed with Eskom’s approach, it is committed to paying what it owes.

Eskom said the city was in breach of the Electricity Supply Agreement by failing to honour the R1.6-billion debt which was due and payable on 17 August 2022.

“The city only paid R68-million to date, which did little to dent the massive outstanding balance on its electricity account,” Eskom said.

The power utility said it has had numerous engagements with the management of the city in a bid to ensure that it settles the account, but this had proved fruitless.

“These actions have not yielded any results as the city has continued with the same pattern. The inconsistent payments are both untenable and unacceptable since Eskom’s financial position is well known.

“The city’s persistent failure to honour its payments places a huge burden on Eskom to continue providing it with electricity.”

Tshwane’s Mayoral Committee Member for Finance, Peter Sutton, said “we acknowledge the R1.6-billion current account and we intend to service this amount. Our finance team has consistently been engaging Eskom on a payment plan. We understand our responsibility to service our account.”


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Sutton noted that the amount the city owed was only four days in arrears. He said it was important to point out the following on the amount the city owed the power utility:

  • The outstanding amount only relates to July 2022 and all prior debt was paid. This is only a current invoice;
  • Tshwane’s invoices for July are payable around 21 August; and
  • On average, residents pay the city in a 60-day cycle for services consumed, while Eskom expects payment in 15 days, and the city has zero cash reserves to bridge the gap with payment from its coffers, and therefore this results in the present situation.

The Eskom threat to cut off power comes months after the city embarked on a cut-off spree under the banner of #TshwaneYaTima (Tshwane switches off).

In February, Daily Maverick reported that the total amount owed to the City of Tshwane had been close to R17-billion, with government institutions and big businesses among those whose services were cut off.

The SAPS and the South African Revenue Service, which were also listed among defaulters, put the blame on their respective landlords for failing to pay the City of Tshwane.

The power utility says it will continue to apply different approaches to recover money owed to it and has informed Gauteng MEC for Cooperative Governance and Traditional Affairs, Lebogang Maile, of the risks associated with the late payment of the city’s electricity account.

Sutton said city management had previously met with the Eskom CEO and CFO and discussed the financial challenges, “so we note this Eskom statement with disappointment”.

“The City of Tshwane remains committed to paying what we owe and ensuring that we service our Eskom accounts. This is why we have embarked on our aggressive revenue collection campaign to ensure that we collect enough revenue to service our creditors like Eskom,” added Sutton. DM

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