Cash-strapped Eskom has taken a hard line against the City of Matlosana municipality in the North West over a unpaid debt of R1.2bn, with the power utility attaching the council’s bank accounts.
The dispute between the parties began after the municipality failed to honour its agreement with Eskom to pay down its debt — an agreement that was made an order of the court in 2021.
At that time, the council owed Eskom about R500m. The agreement was that the city would liquidate its indebtedness to Eskom by way of payment of large sums of money.
However, the municipality failed to comply with payments as undertaken. This saw the state-owned power producer issuing a writ of execution in August 2021 for payment of the sum of R228m.
The sheriff of the court proceeded to attach the municipality's bank accounts at Absa bank and Nedbank.
The Klerksdorp-based City of Matlosana responded by approaching the South Gauteng High Court on an urgent basis, seeking an order to set aside or uplift the attachment on its bank accounts.
Judgment on the application was handed down in July 2022, dismissing the municipality's application. An application for leave to appeal was also dismissed in February 2023.
Eskom then reissued a writ of execution in March and again attached the municipality's bank accounts, this time demanding R1.2bn.
Not willing to cave in, the municipality launched another urgent application a month later, asking for a stay or suspension of the writ in terms pending an application still to be launched suspending the court order of 2020.
The municipality told the court it needed to be given an opportunity to make application to National Treasury for municipal debt relief in respect of the debt it owes Eskom.
It also said if the writ is not uplifted it will prejudice its ability to provide services within its jurisdiction and that a prolonged attachment of its funds at both banks “will result in it not being in a position to pay its employees as well as to assist indigent citizens who rely on free energy supply from the municipality”.
Eskom opposed the application.
On Wednesday, judge MA Makume dismissed the City of Matlosana's application with costs.
“Should the municipality be successful in its application for debt relief it still does not amount to a rescission of the order granted on December 8 2020. The debt relief is aimed at nothing else but to improve financial administration and accountability within Municipalities an issue which is bedevilling government and is clearly lacking,” the judge said in the judgment.
Eskom is facing a debilitating cash crunch, partly due to ballooning municipal debt. The entity reported a loss before tax of R21.2bn for the 2024 financial year, against a budgeted loss of R13.6bn.
On Tuesday, the Treasury told legislators that total invoiced municipal arrear debt increased to R58.5bn.
“A total of 61 municipalities have total arrear debt of more than R100m each. Eskom continues to pursue a multipronged strategy aimed at recovering the municipal arrear debt owed, with little success,” it said.
khumalok@businesslive.co.za