Joburg ends alarming dispute with Eskom by agreeing to pay
12 November 2024
After a year of first delayed payments and then refusing to pay, the City of Johannesburg (CoJ) has agreed to pay its R4.9 billion outstanding Eskom bill.
The City’s concession ends months of fighting over power bills and strong indications that the City is in serious financial difficulties.
The dispute has involved e-mailed pleas from Eskom, arbitration, site visits, audits, a court judgment against the City, further court action still underway, an ongoing dispute over billing, and now mediation by Minister of Electricity and Energy Kgosientsho Ramokgopa.
The CoJ agreed to pay the outstanding balance owed to Eskom after an emergency meeting between the CoJ, the Minister, CoJ utility City Power and Eskom, effectively keeping the lights on in the city. An independent assessment into the billing dispute between the CoJ and Eskom will be conducted by the South African National Energy Development Institute (SANEDI) and a report will be issued to the parties by November 25.
On Thursday, Eskom served a notice of intention to interrupt power supply to the CoJ and City Power at certain pre-determined times of day in accordance with the Provision of Promotion of Administrative Justice Act (PAJA). The notice is now expected to be withdrawn, either before or after the release of the binding findings of the independent assessment, given the CoJ commitment to immediately pay outstanding invoices for bulk electricity.
Minister Ramokgopa reiterated the principle of “user pays” and that any dispute by CoJ over incorrect billing had to be decoupled from its obligation to pay its bills. Residents and customers in the City will be very familiar with this system as a principle, as it is the method used in disputes over incorrect billing by CoJ itself and how residents have had to raise disputes with the City. If there is evidence of overbilling by Eskom, the CoJ account will be credited. The amount owed and under dispute is R4.9 billion and is due to increase with the soon-due November account.
The dispute has gone through several rounds of arbitration, court action and audits since 2019. The court case which resulted in a June judgment against the CoJ – which the CoJ is appealing – heard that the CoJ has been a slow payer since October 2023, citing financial difficulties, and then failed to pay the April account. In further court action months later, Eskom said the City had failed to pay the April, May and June accounts.
JoburgCAN, an initiative of OUTA, is alarmed by the way that the dispute has been handled, showing both issues with CoJ cashflow and severe breakdowns in inter-governmental relations.
In court papers back in July 2024, the City admitted to collection problems resulting in its inability to fund payments to Eskom. In today’s media briefing which announced the agreement to pay, City Power said that the legacy of loadshedding coupled with a dwindling revenue base has left financial reserves depleted and the monthly maintenance budget exceeded.
The CoJ has claimed a billing dispute, while Eskom in its court papers dismissed this as a fabrication and an excuse to avoid paying. While multiple workstreams and task teams have been appointed by Eskom to attempt to resolve the dispute and check all supply points for inaccuracies, the meters on the CoJ end of the system either do not exist or are not working. The City does not appear to have produced evidence or data to back up its claim of based its overbilling and inaccuracy.
The CoJ failure to produce clear evidence, and its claim of unresolved billing queries back to 2020, do not inspire confidence in the CoJ’s administrative abilities.
JoburgCAN has sounded the alarm over increasing tariffs, the implementation of the R230 prepaid service charge and an unfunded budget as a perfect storm for CoJ to not be able to cover its expenses as residents cannot afford to pay for services.
Our Free Basic Services (FBS) Report showed that money intended to alleviate stress on households that cannot afford utilities is being spent on municipal functions instead of benefiting those who need it, and further undermining City Power revenue. This failure to use the FBS funding correctly was acknowledged today by Minister Ramokgopa, who mentioned plans to rollout smart meters that could directly load allowances to registered households rather than relying on municipal entities to allocate it.
While Joburg residents have been given a reprieve from imminent power cuts, JoburgCAN calls on residents to remain vigilant as we await the official withdrawal of Eskom’s disconnection notice. If the notice is not withdrawn or the CoJ fails to abide by the independent report on billing issues or pay the outstanding bills, JoburgCAN calls on residents to unite to make submissions on this matter. The notice period in this event will likely be extended out to January, holding off the threat of electricity outages over the festive season.
Issued by Julia Fish, JoburgCAN Regional Manager, 12 November 2024
