- Eskom begins legal consultation process that could lead to electricity supply interruptions in 14 municipalities.
- Municipal arrears exceed R110 billion nationally despite National Treasury debt relief programme.
- Utility warns continued non-payment threatens financial sustainability and electricity sector reform.
Eskom has initiated a public consultation process on its intention to interrupt electricity supply to municipalities with persistent unpaid electricity accounts, as the utility moves to address escalating municipal debt and safeguard the financial sustainability of the national power system.
The process follows what Eskom says were exhaustive attempts to resolve the issue through the framework of the Intergovernmental Relations Framework Act. The utility is now issuing notices in terms of the Promotion of Administrative Justice Act, which allows affected parties to submit representations before any further action is taken.
Approximately 14 municipalities have been selected for the consultation process. Eskom said these municipalities have failed to settle their electricity accounts for at least 18 months, have not complied with conditions of the National Treasury municipal debt relief programme, or present a significant financial risk to the utility.
Agnes Mlambo, acting Group Executive for Distribution at Eskom, said addressing rising arrear debt is essential to protect operational and financial gains achieved during the first three years of the company’s turnaround programme.
“We have to address rising arrear debt to protect the operational stability we have restored and the financial discipline we have rebuilt in the first three years of our turnaround to deliver on our developmental mandate,” Mlambo said.
She added that the turnaround programme is enabling businesses to protect and create jobs while supporting strategic industries to remain competitive, which in turn supports economic growth in communities.
Eskom said it is encouraging all stakeholders to support efforts to resolve the issue and has invited written submissions or proposals that could help achieve a sustainable solution. The utility will determine the next steps once all submissions made through the consultation process have been fully reviewed.
While Eskom acknowledged that communities could be affected by potential supply interruptions, it said continuing to provide electricity without payment is financially unsustainable. Municipalities collect electricity revenue from customers but in some cases fail to remit these funds to the utility, undermining Eskom’s financial position and affecting electricity service delivery.
If municipalities fail to take corrective action, Eskom said it may implement credit control measures, including interrupting electricity supply at predetermined times as permitted by law. Continued defaults could result in supply being limited to levels that correspond with payments received.
Municipal electricity debt across South Africa has now exceeded R110 billion despite intervention from the National Treasury through a municipal debt relief programme aimed at restoring sound financial management.
The programme ring fences historic electricity debt and suppresses related interest to provide municipalities with financial space to meet their current payment obligations.
Eskom warned that the escalating municipal debt burden also has broader implications for South Africa’s electricity reform agenda. Rising arrears are delaying progress on the legal and operational unbundling of Eskom’s distribution business and could undermine efforts to open the electricity market to new participants.
The utility said the continued increase in municipal arrears highlights the urgent need for decisive action to recover debt while maintaining the stability of the country’s electricity supply system.
Author: Bryan Groenendaal
