Power Minister Kgoshyensho Ramokgopa said he had entered into negotiations between Eskom and City Power but the two sides had not been able to “find each other”. (Wald Sweegers/Bloomberg via Getty Images)
Power Minister Kgosiensho Ramokgopa said Eskom would not stop supplying electricity to the city of Johannesburg despite threats to do so due to unpaid debts and a large current account balance.
Ramokgopa said at a press conference on Monday that the escalating conflict between the state-owned power company and City Power had caused “huge anxiety” for residents and businesses.
“At the heart of this dispute is the city authority, and by extension the City of Johannesburg, which is dissatisfied with the accuracy of the information.” [Eskom’s billing]”
Eskom announced on Friday that it had served a notice to suspend supplies to the city due to City Power's R4.9 billion arrears. Eskom said the city's current account balance was R1.4 billion, due to be paid at the end of November.
On the same day, the city issued a strongly worded rebuke and issued a statement saying it was in a dispute with the national power company over overcharges of more than R3.4 billion.
Ramogopa said the current dispute centers on the October 2023 Bill. “[City Power and COJ said that] Until this issue is resolved, we will offset the amount you owe us against your invoice and we will pay you the difference. ”
However, he said that the city power company, which is the party receiving the bill, is obligated to pay.
Mr Ramokgopa said he intervened in the ongoing negotiations because Eskom and City Power were unable to “find each other”. He added that it was decided not to restart the negotiation process.
He said a “point of failure” in the negotiations had been identified in that an independent technical assessment was needed to reconcile and confirm Eskom's claims and City Power's claims.
“Independent in this case means someone who is not currently associated with either political party,” he said.
As there was a national body with the necessary capacity to carry out the assessment, it was agreed that the South African National Institute for Energy Development would take on the role, along with “technically competent persons''.
Those individuals will be supported by two people each from Eskom and City Power.
The evaluation is expected to occur within the next 14 days. The hope is that a “more permanent solution” can then be found, he said.
Mr Ramogopa also said the “challenges” the city was experiencing were representative of those faced by all municipalities across South Africa.
“We have seen local governments find it increasingly difficult to meet their obligations as their revenue base shrinks, in part due to the economic downturn.
“This is also the result of skills depletion at local authority level, an inability to ensure the completeness of claims, an inability to ensure accurate claims are being made, and ineffective credit control measures.
“All of this has resulted in a reduction in the revenue base of local governments.”
Citing the example of how quickly local government debt accumulates, he said during a regular performance report on the country's electricity grid earlier this year, local governments owe Eskom a cumulative total of around 78 billion yen. He said he was in debt to Rant. Three months later, that amount had increased to R90 billion.
“Essentially, we are seeing an average increase in debt of about R3 billion per month.”
Mr Ramokgopa said he accepted that the winter duty levy was higher than at other times. “So this may not be an accurate reflection of what the trend line is, but what I want to say is that the trend line is trending upwards and considering the past three months of debt…currently That means it's at R90 billion. “
He said if Johannesburg collapsed, the South African economy would also collapse.
Johannesburg's mayor, Dada Morello, told a news conference that the dispute with Eskom was ongoing, but that it had nothing to do with funding “as the city has committed to paying Eskom.” Rather, there was a problem with meeting payment deadlines.
“There will be a delay of one or two weeks, depending on the city's cash flow situation,” he said.
City Power chief executive officer Tsifulalo Mashaba said there had been “challenges” with Eskom's billing since 2019. She said past billing disputes had been fixed, but the current dispute needed to follow a “process” so Eskom and local authorities could “find each other”.
