Carol Paton Writer at Large

President Cyril Ramaphosa’s office says it cannot step in to prevent power utility Eskom from cutting off the electricity of dozens of businesses located in failing municipalities.

Eskom is poised to cut off electricity in at least five municipalities, putting thousands of jobs at stake and bringing basic services such as sewage reticulation to a halt. Several firms have resorted to the courts to stop the cut-offs, with five court applications in the works and another dispute in mediation.

Eskom is owed R13.6bn by defaulting municipalities, an amount that increased by 30% over the past year. The power utility itself is in a battle for survival with a huge debt it is unable to service from its operating revenue and tariffs that are not cost-reflective.

In one of the worst cases of municipal arrears debt, in Maluti-a-Phofung — which includes the Free State town of Harrismith — businesses have named Ramaphosa as a respondent in an application, appealing to the Free State division of the high court for an order that will compel him to intervene.

Maluti-a-Phofung owes Eskom R2.7bn and has not paid its Eskom account since 2011.

The applicants, who include the Harrismith Business Forum, Boxmore Plastics, Nestle, 11 other businesses and a private hospital, argue that in terms of the constitution, the provincial government has failed to intervene effectively to assist the municipality. It argues that the national executive now has a responsibility to intervene.

In a replying affidavit, director general in the presidency Cassius Lubisi says a threshold for an intervention by the national executive has not been reached. He says this can only take place if it were decisively determined that an intervention in the municipality by the Free State provincial government had failed to do so.

'Early days for intervention'

The provincial government took over various functions of the municipality under section 139(b) of the constitution six months ago.

This intervention is still "in its infancy and has not been given an opportunity to yield tangible results", says Lubisi.

The affidavit also spells out how an interministerial task team, headed by the minister of co-operative governance and traditional affairs, has been dealing with the matter of municipal debt to the state power utility for the past 18 months.

An advisory panel was established in October 2017 to assist the task team, whose work "was ongoing", it says.

In the period since the task team was established, business in at least five municipalities have been faced with cut-offs and have turned to the courts.

Affected businesses include Bridgestone Tyres in Madibeng, which includes Brits; Astral Foods in Lekwa, which includes Standerton; Cape Gate and African Cables in Emfuleni in the Vaal Triangle; farming operations represented by Afgri in the Free State; and property company Resilient in Emalahleni, which includes Witbank.

Businesses in Thaba Chweu, which includes the Mpumalanga town of Sabie, were in court on Monday and Tuesday to support an application by the Sabie Chamber of Commerce and two others.

In its annual report published in July, Eskom said municipal arrears debt grew "exponentially" over the past year and was listed as one of the biggest risks the company faced.

In a responding affidavit in the Maluti-a-Phofung matter, Eskom argues that in terms of the law it has a supply agreement with the municipality alone — and not the businesses concerned — and is entitled to cut off services when a customer does not pay.

The Eskom annual report indicates that the company expects municipal arrears debt to deteriorate.

"Our view is that, unless the root causes identified are addressed, the payment challenges in municipalities will not improve significantly," the company says.