Against a backdrop of poor financial management at local government level, and a national electricity grid under severe stress, Eskom has threatened to turn off the electricity supply of four Free State municipalities who have racked up debts of over R700-million combined.
According to Eskom, the Ngwathe, Dihlabeng, Maluti-a-Phofung and the Matjhabeng municipalities in the Free State have all been issued with notice to terminate their electricity supply. In one case a court-ordered payment plan was reached with the municipality, while two municipalities are currently trying to interdict Eskom from turning off the lights.
On February 19, the acting municipal manager of the fourth municipality, the Matjhabeng municipality, was found guilty of contempt of court after two court orders, in which the municipality had to supply a range of documentation to the court, were ignored.
The other three municipalities currently in court with Eskom are the Ngwathe, Dihlabeng and Maluti-a-Phofung municipalities in the Free State. Matjhabeng is the second largest municipality in the Free State and provides insights into possible reasons why these municipalities are unable to pay their debts.
Matjhabeng includes the town of Welkom and is home to a lucrative strip of gold mining just north of Bloemfontein. It only avoided having its lights switched off because of two court orders which allowed it to pay off its debts to Eskom, after Eskom issued it with a notice that the electricity would be cut off – but these court orders were all but ignored. The sentence was suspended on condition that the acting municipal manager, Mothusi Lepheana, supply the court, and Eskom, with detailed reasons as to why the municipality defaulted on its payments to Eskom to the tune of about R400-million.
Lepheana is an admitted advocate and headed the municipality’s legal division prior to his appointment.
Eskom notified the Matjhabeng municipality in the Free State that it intended to switch off its electricity due to unpaid bills, then exceeding R300-million, in February 2013. The municipality went to court to try to interdict Eskom from doing so, and an agreement was reached. But after two years of court action, and with the ever-escalating debt still unpaid, the municipal manager failed to convince the court why he should not be found in contempt of court.
Municipality described as a ‘mendacious litigant’
The scathing judgment against Lepheana made it clear that this would be the last time the court would be lenient to Matjhabeng before the electricity supply would be cut off.
Judge Johann Daffue of the Bloemfontein high court described Lepheana’s evidence as “far-fetched”, and described the municipality as a “mendacious litigant”. Yet local authorities are all but silent on the judgment.
In response to questions, municipal spokesperson Kgojane Matutle said the court’s decision was “unfortunate”. He declined to comment further because the municipality is weighing up its legal options.
Across the country, municipalities owe Eskom R4-billion, Eskom told the Mail & Guardian this week. It said municipality’s failure to pay for the electricity they buy from Eskom was a continuing “concern” and that various government departments were involved in trying to address the problem.
Illegal electricity connections exacerbated the problem, Eskom said.
It emerged in court that Matjhabeng said it was hoping for a bailout from either the provincial or national government, although the court called this “hearsay”. This was because the municipality could provide no evidence of discussions of this nature having taken place.
This was not the only evidence that Daffue rejected. He said that Lepheana, in providing reasons why he should not be found in contempt of court – which he also provided late – provided “false”, “contradictory” information; relied on hearsay evidence, provided “far-fetched” information and, in at least one instance, “deliberately tried to mislead the court”.
Daffue said: “His attitude throughout is baffling and his conduct undermines the esteem in which the office of municipal manager ought to be held.”
The Free State premier’s office did not respond to questions last week.
A spokesperson said the office had been preoccupied with matters at the provincial legislature and promised to respond soon. Attempts to reach the Free State ANC for comment were unsuccessful.
Lepheana did not respond to repeated requests for an interview via his office.
A history of non-compliance
Prior to the February judgment, two court orders were issued against Matjhabeng: on July 21 2014, and September 18 2014.
It emerged in court that the municipality did not pay its full monthly accounts to Eskom until July 2012, when all the arrears were paid in full. But it failed to pay Eskom after that again, and its debt stood at R143-million in January 2013.
Eskom threatened to disconnect the electricity supply if the debt was not settled in two payments. Matjhabeng went to court in March 2013 in an attempt to interdict Eskom from disconnecting the electricity supply. The matter was settled – the municipality agreed to pay its debt in two instalments.
Eskom went back to court a year later. By July 2014, with Matjhabeng’s debt to Eskom now at over R335-million, a new court order was in place. The court instructed the municipality to provide a host of documents to Eskom by August 6. This included agendas, council minutes and council resolutions about its electricity tariffs, correspondence with the electricity regulator, the municipality’s budget allocation for bad debt, and consultants’ reports. Eskom and Matjhabeng were to enter into consultations later that month, to report back to court on their progress in September.
Critically, the municipality was to carry on paying for its electricity from July onwards. If it did not do this, Lepheana would have to report to the court.
Matjhabeng did not submit all the necessary documentation, and it did not pay its ongoing monthly bills to Eskom.
In September 2014, the court ordered it to pay R371-million to Eskom, and asked for reasons why Lepheana should not be held in contempt of court for failing to implement that July court order. A court date was set down for November 2014.
Lepheana was appointed as acting municipal manager as of July 1 2014.
Meanwhile, Eskom said it was prepared to let the municipality pay of its debts until 31 March 2015. Matjhabeng, on the other hand, passed its own council resolution in which it decided to set its own deadline for September 2015.
Daffue found that Lepheana’s affidavit, in which he argued that he should not be found in contempt of court, was filled with hearsay evidence, did not address Eskom’s concerns, and contained no first hand accounts of the events.
Daffue said Lepheana’s approach was similar to Matjhabeng’s “lackadaisical” approach to the saga. And if Lepheana was not able to make sure the court was provided with the necessary documentation by August 6, as the court ordered, he should have reported this to the court instead of waiting for contempt of court proceedings, said Daffue.
Prior to his appointment to the acting position, Lepheana headed the municipality’s legal department, so Daffue said he was not a “newcomer” to the scene.
Said Daffue: “His version that he believed that it would be ‘unnecessary’ to burden the court with unnecessary affidavits and reports are unbelievable. He had to comply with a court order and that is the long and short of it.”