Eskom vs City Power
By Thabo Mosia
The High Court in Johannesburg has dismissed Eskom’s urgent application to force City Power, Johannesburg’s electricity distribution entity, to settle an outstanding debt. This debt, which remains under dispute, has been a point of contention between Eskom and the City of Johannesburg for several months. Eskom had sought to recover payment for electricity services provided in March, a sum amounting to R1 billion plus interest.
This ruling follows a June court order that instructed both the City of Johannesburg and City Power to pay the outstanding balance. However, City Power has contested the amount, arguing that it is not liable for the total sum Eskom is demanding.
The Court’s Ruling and Its Implications
In its decision, the High Court highlighted the complexity of the dispute between the two entities and determined that the matter should be settled through negotiation rather than through urgent legal action. Eskom’s application was dismissed on the basis that it did not meet the threshold for urgency, with the court stating that this is a matter that requires thorough deliberation due to its impact on both parties and, more importantly, the broader Johannesburg community.
Eskom’s attempts to recover the debt urgently stemmed from its concerns over the financial implications of non-payment. The power utility has long been struggling with its own financial challenges, compounded by widespread non-payment from municipalities across the country. The unpaid debts from municipalities have contributed to Eskom’s liquidity issues, which have directly affected its ability to maintain reliable electricity supply across South Africa.
City Power, on the other hand, has maintained that while it acknowledges some of the debt, the disputed amount must be clarified before any payments are made. The entity argues that Eskom’s billing system and the manner in which bulk electricity supply charges are calculated have been inconsistent. City Power’s spokesperson reiterated that the utility will not settle debts until it is satisfied that the charges are accurate and fair.
A Long-Standing Conflict
The dispute between Eskom and City Power is emblematic of a larger problem that has plagued South Africa’s power sector for years—municipal debt. Municipalities across the country owe Eskom billions, with Johannesburg being one of the largest contributors to the utility’s financial woes. The unresolved debt has placed immense pressure on Eskom’s operations, resulting in frequent load-shedding and maintenance backlogs.
In June, the High Court had ruled that the City of Johannesburg and City Power were to pay R1 billion for the bulk electricity supplied in March. However, City Power’s legal team immediately filed an appeal, leading to the ongoing legal battle. Eskom’s recent attempt to expedite the resolution of this matter through an urgent application has now been thwarted, with the court dismissing the case.
Eskom’s Response to the Ruling
Following the High Court’s dismissal, Eskom expressed disappointment in the outcome. In a media statement, the power utility’s Chief Financial Officer highlighted the growing frustration within Eskom’s leadership regarding municipalities’ inability to settle their debts.
“This ruling delays the resolution of a critical financial matter for Eskom. The unresolved debt with municipalities, including City Power, continues to impact our financial sustainability and our ability to meet our operational obligations,” said the CFO. “We remain committed to working with the City of Johannesburg and City Power to resolve this issue, but we urge them to recognize the importance of timely payments for services rendered.”
Eskom has indicated that it will explore other legal avenues to recover the outstanding debt if negotiations fail to yield a satisfactory result.
City Power’s Standpoint
City Power welcomed the court’s ruling, with its management asserting that this will allow for a more structured dialogue with Eskom regarding the disputed amount. City Power’s Chief Executive Officer stated that the entity has no intention of evading its financial obligations, but it insists on transparency and accuracy in billing practices.
“We appreciate the court’s decision as it allows us the opportunity to engage with Eskom on this matter in a way that ensures fairness and clarity. While we understand Eskom’s financial position, we must also ensure that the charges levied on City Power are accurate and justifiable,” said the CEO.
City Power has also emphasized its ongoing commitment to improving its financial standing. The utility is working with the City of Johannesburg to address inefficiencies in revenue collection and curb electricity theft, both of which have contributed to the financial strain experienced by the entity.
The Broader Impact on Johannesburg Residents
While the court’s decision is a legal victory for City Power, the unresolved debt continues to pose a risk to the stability of electricity supply in Johannesburg. Eskom has previously threatened to cut off electricity to municipalities that fail to pay their debts, a move that could have catastrophic consequences for residents and businesses in Johannesburg.
Load-shedding has already had a severe impact on the city, with frequent power outages disrupting daily life and economic activities. Should Eskom decide to escalate its efforts to recover the debt by restricting power supply to Johannesburg, the city could face even more significant disruptions.
The Johannesburg Chamber of Commerce and Industry (JCCI) has expressed concern about the potential fallout from the ongoing dispute between Eskom and City Power. The JCCI’s spokesperson emphasized that a swift resolution is necessary to avoid further economic damage.
“We urge both parties to prioritize negotiations and resolve this matter as soon as possible. The residents and businesses of Johannesburg are already suffering from load-shedding, and any further interruptions to power supply would be devastating to the city’s economy,” the JCCI said in a statement.
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