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04 May 2015 15:49
Twelve of the 20 top-defaulting municipalities have made payment arrangements with Eskom.
Seven municipalities have been issued public notices of impending power cuts.
Four of them are neighbouring municipalities in Mpumalanga, three are in the Free State.
In April Eskom warned that it would cut the electricity supply during peak hours to 20 municipalities that were more than 30 days in arrears on their accounts. Ten municipalities have since made payment agreements with the electricity utility. Their electricity supply will not be interrupted.
Meanwhile, Eskom said it has issued public notices of impending power cuts starting on June 5 to seven of the remaining 10 defaulting municipalities.
Do you live in the jurisdiction of one of these municipalities? Click on the map below for details. Those in red have not made payment agreements, those in blue have.
Eskom’s power interruption threats are clearly an attempt to get municipalities to get their financial management in order and it’s unlikely that it wants to go as far as to cut power supplies.
The total arrear debt – or accounts not paid for more than 30 days – of all the country’s municipalities at the end of March was R4.6-billion, Eskom said in a media statement on April 10. The top-20 municipalities owed R3.68-billion of that, which is 80% of the total debt.
The tactic appears to be working because the municipal arrear debt has been reduced by R54-million since Eskom's original announcement on April 10, the company said.
Eskom said in a statement that it recognises that the power cuts will cause undue hardship to communities. But "power interruption and/or disconnection are always implemented as a last resort when all other viable options have been explored."
Brian Molefe, Eskom's acting chief executive, said in a statement on April 29: “Eskom has reached a point where it can no longer continue to provide power without receiving payment in return.
"We are pleased that these 10 municipalities are doing their bit to ensure that they reduce the debt owed to Eskom and we encourage all defaulting municipalities to do the same."
However, municipalities have to comply consistently with the payment agreement terms on a monthly basis. “If these conditions are not met, interruptions of supply will be implemented without further notice," the company said.
Eskom says it is exercising its right to disconnect the power supply to defaulting municipalities according to provisions in the Electricity Regulation Act, which state that “a licensee may not reduce or terminate the supply of electricity to a customer, unless … the customer has failed to honour, or refuses to enter into, an agreement for the supply of electricity; or the customer has contravened the payment conditions of that licensee.”
The members of the top-20 defaulting municipalities group that haven’t yet made payment agreements with Eskom appear to have met those conditions.
But what of the people living in the defaulting municipalities who have have paid their electricity bills but now face being penalised for the failings of their local government?
Section 33 of the Constitution protects people against unlawful, unjust and unreasonable decisions from government officials or departments. To protect people’s rights decisions of every administration at every level of government have to comply with the rules that are in the Promotion of Administrative Justice Act.
According to Eskom, it is complying with the Act by giving consumers within the jurisdiction of defaulting municipalities adequate notice of its intentions to take action and by giving them an opportunity to make written representations to Eskom.
“It’s a fascinating saga, although not, of course for the poor residents of the municipalities handing in the balance of negotiations,” said Karen Heese, an economist at Municipal IQ.
”On the one hand Eskom argues that it is entitled to cut off defaulters. Given its precarious financial state, due warning and that fact that municipalities have means for payment via what residents have paid and (until recently) the equitable share, I think there is a good deal of weight to this application of the Electricity Act,” she said.
The equitable share is funds allocated to municipalities by the treasury to enable them to provide basic services and other functions.
“Also, Eskom is not proposing complete cut-offs, but rather for significant and inconvenient chunks of the day so it is not absolutely depriving residents of their right to electricity,” said Heese.
The power interruptions will be implemented on week days from 6am to 10am and from 5pm to 9pm, and at weekends from 7am to 10am and from 5pm to 8pm, according to an Eskom statement.
“The constitutional issue for me comes down to whether the municipalities that have failed to reach an agreement are failing residents (I believe they are where money meant for bulk electricity is not being paid on to Eskom) and if so, what the recourse is for residents who are paying for electricity but nonetheless face cut-offs,” said Heese.
”Given that it is local government's mandate to provide electricity in terms of the Constitution (and not Eskom's), this is where I would imagine any violation exists, and implicitly, so too the failure of co-operative governance to support these municipalities,” she said.
There is no right to electricity in the Constitution, but there is a right to basic municipal services in the Municipal Systems Act, which includes electricity. Local government is responsible for the provision of water, electricity and sanitation services to households, according to Local Government Action a loose alliance of South African organisations working to promote democracy, accountability and delivery in local government.
Koketso Moeti, the national coordinator of Local Government Action, said the issue is complex. There are two ways of looking at it: you can measure the performance of local government from the perspective of compliance, or from services delivered.
If you’re focus is on compliance, the action being taken by Eskom can be seen as a good thing because it’s about fostering compliance to financial management standards. But from a service delivery perspective, interrupting electricity supply to the municipalities will have huge implications for whole communities of people.
Good financial management has its place but the core function of local government is service delivery, said Moeti.
If Eskom does decide to make the scheduled cuts to the electricity supply of the seven municipalities it has notified, it will affect the supply of a range of basic services to the nearly 2-million people who live in those municipalities.
The power cuts will have major impacts “not only for the municipalities concerned but also for the economy, essential services such as hospitals, clinics, schools, businesses and communities, including those who have paid their utility bills”, said the South African Local Government Association (Salga) in response to Eskom’s announcement on April 10.
AfriForum, a minority rights non-governmental organisation, has taken up the cause of the people living in those municipalities.
“We cannot allow paying customers to be shed in darkness,” said AfriForum’s Tiaan Esterhuizen in an email.
The organisation has instructed its legal team to prepare court papers to force municipalities to pay their outstanding debts to Eskom.
"The National Energy Regulator and the MEC for local government should’ve stepped in earlier to prevent the accumulation of debt to Eskom,” Esterhuizen is quoted as saying on AfriForum's website.
This is not the first time Eskom has threatened to cut off bulk supply to municipalities. Four of the six Free State municipalities included on Eskom’s top-20 list — Ngwathe, Dihlabeng, Maluti-a-Phofung and Mtjhabeng — have already been threatened with cut offs because they accumulated between them a debt of over R700-million.
All but two of the top-20 defaulting municipalities — Naledi in North West province and Thaba Chweu in Mpumalanga — also had their equitable share withheld by the treasury in March because they have been "persistently in arrears" with their electricity and other service delivery bills.
Click on the map below to view details of all the local municipalities that had their equitable share withheld by treasury.
"The persistent failure by some municipalities to pay creditors within 30 days amounts to financial mismanagement and the national treasury deems it important to take steps to ensure that municipalities meet their financial commitments," the treasury said in a statement.
Municipalities owe money not only to Eskom, but also owe billions of rand to water boards, it said in the statement.
"There cannot be an improvement in overall service delivery in an environment where principles of efficient public finance management are regularly disregarded," it said.
In response to the treasury's announcement, Salga said that withholding equitable share funding will disproportionately punish the poor and negatively affect service delivery to those communities.
Government departments owe about R5.4-billion of that debt, it said.
”While municipalities have a responsibility to provide sustainable services, citizens, businesses and indeed government departments also have a responsibility to pay for the services they use,” said Salga in a statement.
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