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Eskom Threatens Power Cuts Over City of Johannesburg’s Massive Debt
In a dramatic escalation, Eskom has issued a stern warning to the City of Johannesburg (CoJ) and City Power, citing an unpaid debt of R4.9 billion and an additional R1.4 billion due by the end of November. The embattled utility, which serves as South Africa’s primary electricity provider, announced its intent to interrupt power supply to the city at predetermined times, following the Promotion of Administrative Justice Act (PAJA).
Eskom’s financial sustainability has been hanging by a thread for years, but this latest conflict with the CoJ underscores the broader crisis of municipal debt. According to Eskom, non-payment by entities like the CoJ forces the utility to borrow money at exorbitant interest rates to cover operational costs, further straining its already precarious balance sheet.
Eskom: “We Can’t Afford to Subsidize the CoJ”
In a strongly worded statement, Eskom said the CoJ’s failure to pay is sabotaging its ability to provide electricity affordably and efficiently.
“Despite all the avenues Eskom explored and efforts to accommodate the CoJ, the matter has reached a point where Eskom can simply no longer afford to accommodate the CoJ without putting further financial strain on and harming its own business,” Eskom stated.
Eskom accused the city of breaching its constitutional obligation to ensure citizens have access to affordable electricity. The utility claims it is now impossible to fulfill its mandate because of CoJ’s delinquency.
Municipal Debt Crisis Reaches Boiling Point
Eskom revealed that municipal debt, which now stands at R90 billion, is crippling its operations. The CoJ’s non-payment exacerbates these issues, with Eskom alleging the municipality is using “set-off claims” to avoid paying its bills.
CoJ has argued, without substantiating its claims, that Eskom is overbilling at some supply points. This dispute has led to City Power deducting alleged overcharges from its payments to Eskom.
Broken Promises
Eskom further disclosed that it had reached agreements with City Power’s executives, including CEO Tshifularo Mashava, to address these payment disputes. However, it alleges that these agreements have been consistently reneged upon, leaving the situation unresolved.
“In more than one meeting, it was agreed that the CoJ would continue to pay whilst the alleged overbilling is investigated; this undertaking has been reneged on,” Eskom stated.
Public Input Sought Before Blackouts
In adherence to PAJA regulations, Eskom has given affected parties until 8 November 2024 to submit written objections or representations. A final decision on whether power interruptions will proceed will be made after 12 December 2024, following a review of these submissions.
Ramifications for Residents and Businesses
If Eskom follows through on its threat, power interruptions could cause massive disruptions to Johannesburg’s economy, already strained by years of unreliable electricity supply. Small businesses and residents may once again bear the brunt of financial mismanagement by both municipal authorities and Eskom.
Eskom’s Call to Action
Eskom ended its statement by calling on the CoJ to take immediate responsibility for its debts, stating that operational costs must be covered by revenue from electricity sales, not loans.
“Borrowing money to fund operational cash shortfalls caused by the failure of municipalities such as the CoJ to pay for bulk electricity increases the costs of providing electricity exponentially.”
For now, the spotlight is on the CoJ to address its mounting arrears and prevent the devastating fallout of power interruptions. Will Johannesburg step up, or will residents face the dark reality of municipal mismanagement?
#EskomMediaStatement
— Eskom Hld SOC Ltd (@Eskom_SA) November 7, 2024
Eskom serves notice of power interruption against City of Johannesburg and City Power. pic.twitter.com/M5BdQpgHFz
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