Eskom secures farmland as security for debt owed by Matjhabeng municipality

15th September 2020 By: Tasneem Bulbulia - Creamer Media Reporter

The Matjhabeng local municipality, in the Free State, has agreed to hand over to State-owned power utility Eskom 139 farms belonging to the municipality as security for debt of R3.4-billion owed by the municipality to Eskom.

The farms are valued at about R2.5-billion.

The title deeds of the farms will be endorsed in favour of Eskom until the debt dispute between Eskom and the municipality is finalised.

This agreement has been made an order of the High Court in the Free State. This step on the part of Eskom is a result of the repeated failures by the municipality to adhere to its payment obligations to Eskom for the bulk supply of electricity, Eskom says.

As part of the agreement, the municipality has withdrawn its application in which it sought to uplift the attachment of its bank account by Eskom, which was granted on September 4.

Eskom has agreed to uplift the attachment of the account and the account was handed back to the municipality. The funds in the account, of R2.7-million, will remain attached and in the care of the sheriff of the court.

Eskom has been involved in numerous court processes since 2014, when the municipality’s outstanding debt totalled R372-million, and employed other collection mechanisms to recover the funds, the utility noted.

It added that the municipality has consistently failed to honour its obligations and payment agreements, as well as court orders, resulting in the debt escalating to R3.4-billion over the period.

“The total outstanding municipal debt of R31-billion as at end-July continues to threaten Eskom’s sustainability. Municipalities have a responsibility to fulfil their financial obligations for the bulk supply of electricity,” Eskom emphasises.

Meanwhile, in terms of the Vaal River Development Association and the Lekwa Rates Payers Association versus Eskom cases, following the judgment of the Pretoria High Court on August 28, Eskom applied for leave to appeal against the judgment and the orders granted in the two matters.

Eskom has filed its grounds of appeal in both matters involving the Lekwa and Ngwathe municipalities, setting out its basis for challenging the orders granted against it.

Eskom’s opposed application for leave to appeal was argued fully in the High Court by all sides on September 11.

On September 14, the court delivered its decision and granted Eskom leave to appeal the judgment and orders of the judgement to the Supreme Court of Appeal (SCA).

The effect of the court’s order in favour of Eskom means that the issue of Notified Maximum Demand is now pending before the SCA, it says.

Eskom has welcomed the decision granting it leave to appeal to the SCA. “The granting of the leave to appeal to the SCA vindicates Eskom’s position that it has always sought to act within structures of the law,” it adds.