State-owned power utility Eskom says notable progress has been achieved as a result of the ongoing dialogue since March with 14 municipalities that have not settled their accounts for bulk electricity supply for at least the past 18 months.

The municipalities were selected because they had also not met the conditions of the National Treasury municipal debt relief programme, or they posed a significant financial risk to Eskom.

The utility had issued notices in terms of the Promotion of Administrative Justice Act (PAJA) to the 14 municipalities across the country in March.

Nine of these municipalities have received council resolutions to sign Distribution Agency Agreements (DAAs), and engagements are ongoing on the implementation of these agreements.

The implementation of the DAAs will result in Eskom partnering with municipalities, for a defined period, to provide expertise and skills transfer in areas such as billing, maintenance of electricity infrastructure and debt collection strategies.

The nine local municipalities are Nketoana, Mpofana, Masilonyana, Nala, Ngwathe, Renosternberg, Thembelihle, Govan Mbeki and Kgetlengrivier.

Eskom also recently concluded a payment arrangement with the City of Ekurhuleni, which resulted in the withdrawal of Eskom’s intention to interrupt supply, it says.

Further, Eskom also agreed to a prepayment arrangement with the Inxuba Yethemba local municipality, which can only pay a certain amount to buy electricity, resulting in Eskom supplying electricity only for the amount that had been paid by the municipality.

For three municipalities, namely the Dr Beyers Naude, Kai Garib and Mamusa local municipalities, Eskom did not receive representations that provide a resolution for Eskom to continue supplying them with electricity, following the PAJA notices.

Eskom has since issued a final notice to these three municipalities to interrupt electricity supply, with the interruption scheduled to start on May 8. However, the engagements remain ongoing, it says.

Initiating the PAJA process ensures Eskom complies with legal requirements while taking the necessary steps to maintain the stability of the electricity supply system, it states.

“Recovering municipal debt enables Eskom to deliver a consistent electricity supply and invest in our infrastructure, enables businesses to protect and create jobs, and assists Eskom to play its part to support strategic industries to remain competitive, as well as contributing to Eskom reducing its dependence on the fiscus,” says Eskom Distribution acting group executive Agnes Mlambo.

She states that it is encouraging to see that some municipalities have already made commitments toward settling their debt through payment arrangements and signalling an intention to sign DAAs.

“Rising municipality debt remains one of the main challenges we face as a business, and we need all hands on deck to ensure services are paid, for the ultimate benefit of the South African economy,” she notes.

Nationally, the outstanding debt to Eskom is about R111.6-billion, despite the National Treasury’s intervention through the municipal debt relief programme, which is aimed at restoring sound financial management at municipalities and includes repeated support mechanisms offered by Eskom.

Initiating the PAJA process ensures that Eskom complies with legal requirements while taking necessary steps to maintain the stability of the electricity supply system, Mlambo says.