For months, electricity minister Kgosientsho Ramokgopa has been sounding the alarm of an existential crisis for state power provider Eskom: sharply escalating municipal debt.
“This is the most urgent task confronting us,” he said in July, warning that if this isn’t dealt with, “Eskom will collapse”.
On Thursday, that threat, and the social upheaval implied in it, was thrown into sharp relief when Eskom finally drew a line in the sand and served a notice “of intention to interrupt power supply” to the City of Johannesburg.
The reason: the city has racked up an electricity bill of R4.9bn – rising to R6.4bn by the end of this month – and has simply refused to pay what it owes. This, despite the fact that many residents have dutifully paid their utility bills, which Joburg’s electricity arm City Power evidently decided not to pay over to Eskom.
“Despite all the avenues that Eskom explored and efforts to accommodate the [city], the matter has reached a point where Eskom can simply no longer afford to accommodate the city,” Eskom said. The city breached its obligations, “making it almost impossible for Eskom to fulfil its mandate”.
The fact that the country’s economic hub – a city which contributes 15% to the country’s GDP – is locked in a battle with another arm of the state over a bill that has escalated to such a dizzying extent is an indictment of the hopeless way in which the city has been run.
This is a city that has had nine mayors in the past eight years, which routinely protects officials accused of corruption, yet can barely keep the taps open, its roads drivable, or its clinics stocked with drugs.
The ANC’s Dada Morero, who took over as Joburg’s mayor in August, said on Friday that he will meet Ramokgopa formally today to find a way to “resolve this issue swiftly”.
Well, there is one obvious solution: pay the bill. The city has, after all, already received much of this money from its residents; why can’t it just pay this over?
The city, however, is sticking to its argument that, actually, it is Eskom that owes it many billions for “overbilling” – money that the city has decided in its wisdom it will simply “set off” against any amount owed to Eskom. The upshot: it has decided it will pay nothing.
On this dubious basis, the city’s CFO, Tebogo Moraka, “demanded” last week that Eskom retract its notice within five days, or the city will take “legal action”.
“The people of Johannesburg deserve reliable and efficient services, and we will not let Eskom’s actions compromise their well-being,” the city said, without any apparent irony.
It is a remarkable statement that confirms that, at some level, the city’s officials do realise – despite its delinquency on services, call centres that treat residents with derision, and an inner city that is not so much lawless as feral – that residents deserve “reliable” services. (Could it be that Morero’s officials feel a sense of competitive envy, in that it is only them who are electorally empowered to compromise residents’ “well-being”?)
‘No basis for refusing to pay’
The city would have you believe it’s a tit-for-tat scenario, where truth is relative.
And yet, this spat over who owes what has already been decided by the high court in Johannesburg – which ruled that it is the city that must pay up.
On June 20, acting high court judge Ngwako Maenetje handed down a ruling in the case brought by Eskom to hold the city to its obligations to repay.
“The account is due and payable on the terms alleged by Eskom,” the judge said. “This means that the City of Johannesburg and City Power do not have a valid defence against Eskom’s claim on the common cause facts.”
The city wasn’t able to prove that any “set-off” applied, the judge said, and it wasn’t able to genuinely argue that it didn’t owe the money for electricity.
So, it appears that what Morero is doing is making a political gamble that Eskom dare not cut the power to the country’s economy, especially at a time when President Cyril Ramaphosa is selling the narrative to investors that the country’s days in darkness are over.
Certainly, the consequences would be devastating – even if Eskom does decide to go ahead with cuts in the way it suggested it might last week, at “certain pre-determined times of day”. Inevitably, this would throw the city back into the dark days of load-shedding, with shops closing their doors, the streets logjammed with lights that don’t work, and tax revenue spiralling.
But what does Eskom do, in the face of another state entity which is breaking its social commitment to pay its own bills, other than cut it off? Already, municipalities across the country owe it R90bn in unpaid debt; if a wealthier city like Joburg ignores its bills, Eskom can never hope to get the money to fix infrastructure and keep the lights on.
More to the point, how can Joburg’s officials expect others to pay the city, when it isn’t paying its own bills?
But this nonchalance shouldn’t be too surprising. Last year, the city admitted that its own staff owed it R2.7m in arrears rates and taxes – with 11 of the 113 employee accounts more than three months in arrears.
None of the signs coming out of Morero’s office will provide any comfort to residents that his new administration intends doing the right thing. On Friday, for instance, Morero spoke of the need to “streamline the public narrative” about the dispute between Eskom and the city.
Disturbingly, this sounds an awful lot like a desire to spin an outcome that plays best politically and in newspaper headlines, rather than dealing with the root of the problem: the country’s wealthiest city simply refusing to pay its bills.
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