Eskom is laughing at Joburg
5 October 2021
Thirty years ago I was the attorney for a Natalspruit electricity consumer whose lights were cut off, despite his paid-up account, by the Germiston City Council. Germiston had problems with non-payers. It tried to force payment by cutting off electricity to a large part of the township. In the Supreme Court Judge Ralph Zulman found against Germiston. The next day I claimed in the media that this was a landmark decision. Zulman, passing me in the passage, teased me by saying that if he had realised it was a landmark decision, he might have found against me.
All these years later the Constitutional Court made a similar judgment. Eskom is not permitted to cut off electricity to whole towns, even if they do not pay.
Eskom has major problems collecting payments. Non-payment, illegal connections, stolen power, destruction of equipment, vandalism, theft of power lines and a failure to refurbish and maintain, are major problems. In Johannesburg, Eskom is responsible for Soweto and Orange Farm plus parts of Sandton. Soweto’s debt to Eskom in 2020 was R12.8 billion, representing electricity used but not paid. R5.3 billion was written off because it was uncollectable. Anyone expecting to collect the R7.5 bn balance is deluded.
City Power Johannesburg serves most of the city, with similar problems. For some years I was a non-executive director of City Power, chairing its Audit and Risk committee. Alexandra pays only 15% of the power it uses. Many other problem areas exist, including 186 informal settlements, all wanting electricity, few wanting or able to pay. City Power was the cash cow of Johannesburg, producing significant income and helping to balance the books. Because more and more consumers do not pay and must be subsidised by the payers, the accounts of City Power are becoming problematic, no longer contributing profits.
Sowetans are in uproar about Eskom’s efforts to obtain payment and about supply interruptions. They demand the city must “do something.” The president was booed when he went campaigning in Soweto. He promised action and it seems City Power will be forced to take over from Eskom.
Nothing could be more attractive to Eskom than getting rid of its Soweto problem and giving it to Johannesburg. The ANC fell for this. Three mayors ago, earlier this year, Geoff Makhubo proposed taking over from Eskom; my article in The Star at the time said he needed his head read. The ANC seldom cares about good governance. Just before an election, knowing the consequences, it says it will take over from Eskom by year-end, without telling us what arrangements will be made.
If the DA wins the election, they would surely demand as pre-conditions for the takeover a substantial grant from Eskom, in the billions, to fund the maintenance and upgrading backlog and also to insist that the government must make a large annual social welfare subsidy to fund electricity for those who cannot pay.
If Johannesburg assumes an unaffordable burden without first negotiating sensible arrangements with Eskom and the government, it will go the way of Eskom, with huge borrowings and a deficit in the tens of billions. Johannesburg could well go insolvent.
Eskom must be laughing at the prospect of off-loading an impossible burden and having the ANC bragging to voters about Johannesburg taking it on. Let’s hope that the city has the brains to ensure that it has the last laugh.
Douglas Gibson is a former opposition chief whip and former ambassador to Thailand. His website is douglasgibsonsouthafrica.comr
This article first appeared in The Star
