Company ‘rescued’ by Nelson Mandela Bay now R11m behind on its rates

While the Nelson Mandela Bay metro faces a public backlash for leasing a R25-million municipal transformer to private company Coega Steels, it has now emerged that the company is R11-million in arrears on its electricity account, while claiming a billing dispute with the municipality.

A Coega Steels municipal electricity statement seen by Daily Maverick shows that the company owes a total of R45-million, including R11-million in arrears due by 13 May.

The company’s electricity account formed part of reports submitted by the Nelson Mandela Bay municipality to the cooperative governance and traditional affairs (Cogta) parliamentary committee on 6 May.

The report shows that Coega Steels is up to date with its monthly R250,000 transformer lease payments.

When controversy over the lease first emerged, Mayor Babalwa Lobishe and municipal officials argued that the decision had been necessary to prevent job losses and keep the doors of one of the city’s biggest revenue contributors open.

However, the lease has been taken on judicial review in a bid to set aside the agreement.

“As at 28 April, the account for (transformer) lease payments of the municipality was up to date. As at 28 April 2026, the municipal account for electricity, water and rates of Coega Steels was in arrears and the municipality has informed the company to effect payment to avoid disconnection. The legal costs incurred to date by the municipality for the high court application [are] R498,944.47,” the report reads.

The report is unclear about whether the legal cost is for the judicial review or the electricity billing dispute.

Municipal spokesperson Sithembiso Soyaya confirmed that Coega Steels’ total arrears stood at R11,993,509.03, as reflected in its April 2026 account.

“The arrear amount arose during the recent billing cycle and forms part of an ongoing legal and administrative dispute relating to billing discrepancies raised by the company.

“The matter is relatively recent and is currently being dealt with through formal legal processes between the parties. As a result, the Municipality is constrained from disclosing further details”.

He said the municipality had already activated the necessary governance, technical verification, revenue management and legal oversight processes.

“This includes ongoing assessment of the account, legal engagement and implementation of all applicable debt recovery mechanisms.”

Coega Steels confirmed the billing dispute, but said it could not provide details as the matter was before the courts.

“It pertains to specific billing discrepancies that are currently being adjudicated. The prescribed legal channels are being followed to ensure a fair and accurate reconciliation of the account. Coega Steels remains committed to settle any verified balance once the process is concluded,” said the company in response to questions sent last week.

“While specific figures remain commercially sensitive and cannot be disclosed, Coega Steels is still one of the region’s largest benefactors to municipal revenue and this contribution continues uninterrupted,” the company added.

Coega Steels said it took its financial and legal responsibilities seriously.

“The mechanisms provided by the Municipal Systems Act are being used to ensure billing is accurate and fair. The company is in ongoing communication with the metro to resolve the electricity dispute and continues to focus on preserving jobs and advancing the industrial economy of the province.”

‘Renewable energy expansion’

To further stabilise operational requirements and reduce pressure on the municipal electricity grid, the company said it recently commissioned a 7.08MWp Solar PV Plant and was actively pursuing further renewable energy expansions for 2026.

“These investments reflect a long-term commitment to sustainable operations and the industrial economy of the Eastern Cape,” said the company.

The lease was entered into in September 2025 for a period of 12 months.

A fraud case against Lobishe over the irregular leasing of the transformer was opened in January by former Good party regional chair Siyanda Mayana. Lobishe has not been charged.

Lobishe was also summoned before the ANC integrity commission, which subsequently found her not guilty of any wrongdoing.

DA councillor Ondela Kepe said the arrears came as no surprise, noting it was not the first time the company had defaulted on its municipal account.

“This whole issue goes to show the kind of administration we were dealing with under (former acting city manager) Ted Pillay. They failed to disclose if the company has been consistent in paying its bill. In 2023, the city wrote off about R10-million for Coega Steels, which means there’s an inconsistency in terms of what we’re being told about the company’s payment history."

Kepe questioned why Coega Steels kept receiving favours from the municipality while other defaulting businesses were disconnected.

“We need to know whose elbows are being greased for this company to get such preferential treatment. (Politics head for budget and treasury) Khanya Ngqisha was on a spree, closing down businesses, making a whole show, but they never touched Coega Steels. If he was really serious about that programme, he should’ve started with them.

“This brings one to think there was never an intention to take the lease matter to council for approval in the first place.”

Good party councillor Lawrence Troon said something deeper was going on between Coega Steels and Ngqisha.

“The first letter to the municipality was not written to the electricity department or the then acting city manager Ted Pillay; it was addressed to Ngqisha. I know his directorate is responsible for municipal accounts, but his involvement with this whole Coega Steels issue needs investigation.”

Troon said that while Lobishe and Pillay had been the public face of the transformer saga, Ngqisha’s role had gone unscrutinised.

“They reported to the Cogta committee that R1.5-billion was written off, not for ATTP (Assistance to the Poor Policy), but for many businesses that make a profit, but claimed [that they were] unable to pay. Why couldn’t they also make payment arrangements, like it’s done [for] individual residents? None of the businesses [are] disconnected for not paying, but they’re quick to act on the residents. There’s something amiss with Ngqisha and his leadership of budget and treasury.”

ACDP councillor Lance Grootboom said he was deeply concerned by a municipal statement reflecting a total outstanding amount of about R45.2-million on the Coega Steels account, with about R11.9-million appearing as arrears.

“This is a very serious matter, especially in a city where service delivery is under pressure and where the municipality continues to struggle with weak revenue collection. Every rand owed to the municipality affects the City’s ability to maintain infrastructure, repair electricity faults, improve water services and deliver basic services to residents.

Grootboom said the matter was more concerning because the City had gone out of its way to assist the company with a transformer.

“That assistance was justified on the basis of protecting jobs and economic activity. However, when such assistance is given, the public is entitled to expect that the company will also honour its financial obligations to the municipality.

“The ACDP acknowledges that the City’s billing system is not perfect. Many residents and businesses have experienced incorrect accounts, unresolved queries and billing problems. However, an amount of this size cannot simply be ignored. It must be properly verified, explained and dealt with urgently.”

Ngqisha said revenue management treated all defaulting accounts equally and that Coega Steels would be no exception.

Asked whether the City would disconnect Coega Steels’ electricity for non-payment, he said: “Of course, revenue management compiles a list every week where our disconnection blitz takes place. If they are in arrears, eventually they will be disconnected, but before we disconnect, there is a process that is followed for all our customers.”

Responding to Troon’s sentiments, Ngqisha said that if Troon were asked to provide proof of his assertions, he would be unable to.

“Well, surely by now you should know that whatever councillor Troon says should be taken with a pinch of salt. I don’t have [the] power to give preferential treatment. Please ask him to provide you with the evidence.

“I assure he will not give you anything. This is the same person who said I bribed someone for R1-million. I took him to court and won. He said I’m putting students on [the] EPWP (Expanded Public Works Programme). Again, no evidence. So my take is that what councillor Troon seems to suggest is simply untrue, and once again he is making wild accusations with no facts.” DM