Rustenburg - The Supreme Court of Appeal (SCA) in Bloemfontein has directed Letsemeng local municipality in the Free State to pay Eskom all amounts in respect of the electricity it receives from the power supplier.
Eskom approached the SCA against the decision of the Free State High Court which had earlier dismissed Eskom’s application which sought to compel the municipality to pay for the bulk electricity received from Eskom.
In its judgment last week, the SCA concluded that Eskom has granted Letsemeng ample opportunity to make arrangements for the payment of its debt and to keep its current account up to date.
"Letsemeng, on the other hand, has displayed bad faith throughout. It has promised to pay, reached agreements on payment plans which, in every instance, it has said it could afford, but has on every occasion cynically breached its undertakings. It cannot continue to receive electricity without paying for it. The high court erred in dismissing Eskom’s counter-application in its entirety,“ the court concluded.
The court directed Letsemeng to pay Eskom all amounts, in respect of the electricity it receives from Eskom, when such amounts were due and payable, in accordance with clause 9 of the electricity supply agreement.
Letsemeng was also directed to pay all arrears debts due and payable to Eskom, in accordance with the terms of the acknowledgement of debt and payment plan concluded between the parties, and further to pay a portion of the equitable share that relates to electricity within 24 hours of receipt of the equitable share.
The municipality was also directed to pay Eskom the amount of R5 million which the National Treasury made available to the municipality for the payment of its electricity debt.
On Monday, Eskom said the court ruling followed a long-running legal battle in which Eskom had been trying to recover debt owed by the municipality that had accumulated more than R41m in January 2020.
"The outstanding debt owed by the Letsemeng local municipality has since jumped to R108.5 million at the end of February 2022. This is in spite of several agreements by the municipality to discharge its debt obligations to Eskom," the power utility said.
Eskom said municipalities across the country owe it more than R44 billion in unpaid debt for the supply of electricity.
"Eskom’s attempts to recover the debt have often been frustrated by conflicting high court judgments some of which have been used by delinquent municipalities as justification for their failure to meet their obligations to Eskom."
The power supplier described the ruling as a groundbreaking judgment on the issue of municipal debt, adding that the SCA had laid down clear legal principles which uphold Eskom’s right to receive payment for the bulk electricity it supplies to municipalities.
IOL