Eskom holds onto its debt recovery right

4 May 2017

The North Gauteng High Court settlement between Eskom and Astral doesn’t usurp Eskom’s constitutional right to recover its debt from the owing municipalities. 

In the said agreement, the applicants consented to paying Eskom the monthly electricity payments owed by making direct payments into the utility’s account number.

Eskom has undertaken to cease all possible electricity interruptions provided there is compliance, by the applicants, with their payment obligation.

Explaining the circumstances of the agreement, Acting Head of Legal and Compliance, Suzanne Daniels, said, “Astral and another industrial customer will be paying their contribution of municipal consumption directly to Eskom which was estimated at about 60% of the monthly municipal consumption.”

She hastened to mention the fact that the Lekwa Municipality remains fully liable to servicing the balance of the debt to Eskom. “The municipality will transfer 15% of its equitable share to Eskom, as and when this is allocated Eskom to absorb the costs of the suit.”

The Municipality has signed a legally-compliant payment agreement, the terms of which still need to be honoured.  Intrinsic to this, the municipality will surrender a portion of its equitable contribution to Eskom towards serving its debt burden.

Daniels highlighted the fact that the present agreement between the utility and Astral is merely an extension of the arrangement that had been in place since January. 

“We have consistently said that the implementation of scheduled interruptions, as a debt recovery mechanism, was an option of last resort; a necessary lever exercised responsibly within the strict application of the required law,” she noted.   

“Eskom will always be mindful of the impact such action would have on the economy and residential customers. That is why there has never been any malicious intent on the part of Eskom in taking this action,” she emphasized. 

“Eskom is always open to creative alternatives to addressing these challenges without totally crippling the functions of a service delivery.  It is in this spirit that the settlement has been reached,” said Daniels.

She said that the solutions for addressing municipal debt cannot be approached on a “one-size-fits-all manner, as each municipality has unique dynamics and challenges – all of which need to be considered on a case by case basis.

Daniels concluded by stating that debt recovery is both about compliance, with the PFMA, and other relevant laws of the country.  

Issued by Eskom Media Desk, 4 May 2017