By Mswazie Dube
MEC for local government, Lebohang Maile is reportedly making concerted efforts to bring Emfuleni municipality and Eskom in one room to resolve the ongoing tug-of war between the two entities over the R2.3 debit.
This was revealed by Emfuleni’s Communication Manager Stanley Gaba after Sheriff of Court attached a fleet of vehicles and office furniture at the municipality’s offices in Vanderbijlpark.
In a statement released late on Tuesday, Gaba painted a bleak financial picture of the local authority.
“While the municipality was making regular monthly payments towards the current account, the historical account in the meantime generated R368 million in interests,” said Gaba. He added that his organisation was trying to negotiate with Eskom to exonerate them from paying interests to the debt. He also conceded that the municipality’s capacity to deliver services was severely compromised, but promised that such a handicap will be sorted out within 24 hours.
He however ruled out any possibilities of power supply cuts except for scheduled load shedding.
He revealed that the municipality have made regular monthly installments totaling R 499 099 398 and R 1 133 330 839 for the years 2018 and 2019 respectively.
“For the current financial year ending in June 2020, the municipality has already paid R 881 864 037, and on the 28th February 2020 a further amount of R 100 million was paid,” added Gaba.
He also revealed that Eskom ignored a payment plan which Emfuleni Municipality presented to the power utility.
However Eskom Spokesman, Sikonathi Mantshantsha, told Vaal Observer that the local authority failed to honour an existing payment plan.
“In November 2019, the Emfuleni Local Municipality submitted a debt re-payment plan, which Eskom has to date not responded to. The MEC is urgently convening the meeting between Emfuleni Local Municipality senior team and Eskom to find a lasting solution to the impasse,” said Gaba
Compounding this situation is the critical matter of electricity tariffs, which contribute the most income for the municipality.
Emfuleni Local Municipality generates over 60% of its revenue from electricity tariffs, most of which is collected from Large Power Users (LPUs).
“For more than 33 years Large Power Users have been paying lower tariffs for electricity, owing to the so-called 1987 agreement entered into by the then Vanderbijlpark Town Council and the Large Power Users. The agreement allowed for LPUs to pay substantially reduced electricity tariffs, with the desire to attract business to the area. In 2018/19 the municipality proposed tariff increases to NERSA, which was approved,” maintained Gaba.
The Municipality Communications manager divulged that the local authority will be engage NERSA to find lasting solution towards the proposed tariff increases.
“This led to massive estimated financial losses amounting to R 261 159 911, negatively affecting the municipality financial position. This means the municipality has to pay Eskom more for bulk electricity purchases, while the municipality cannot recover the cost for distribution of electricity to off-set the Eskom debt. Some of the Large Power Users are paying directly to Eskom at reduced Eskom tariff cost, with far lower tariffs when compared to what the municipality was charging them before the proposal of the new tariffs,” said Gaba