Eskom compared with Shakespeare’s Shylock – court

The Harrismith-based Maluti-a-Phofung municipality will be back in the Bloemfontein High Court on Tuesday (today) in a further desperate effort to regain control over its bank account.

Read: ‘Eskom owes us R4.8bn’ claims beleaguered municipality

This follows its short-lived victory on Friday, when the court lifted Eskom’s earlier attachment of the bank account. Maluti was able to withdraw R5 million, but no further dealings were permitted after Eskom submitted an application for leave to appeal hours later.

This automatically suspended the court order.

The parties will however be back in court on Tuesday when the municipality will ask that the order be implemented pending any appeal proceedings.

Hardships

The municipality has not been able to pay salaries or service providers for the past two months and service delivery has come to a total standstill, according to its legal representative attorney Bertus Maritz of Bokwa Law Incorporated.

Due to the attachment, municipal staff are losing their medical benefits since contributions are outstanding. The water supply to communities in QwaQwa, which is within the municipal area, was also interrupted on Thursday when the power supply to the Sterkfontein water treatment facility was disconnected due to non-payment.

The court rejected Eskom’s argument that the hardship following its attachment of the municipal band account should be ascribed to the municipality rather than itself.

It found that Eskom as an organ of state cannot distance itself from such suffering.

Judge Joseph Mhlambi compared Eskom with Shylock, the character from Shakespeare’s play ‘The Merchant of Venice’, who insisted on a pound of flesh from his defaulting debtor as security for a bond. Shylock was only stopped when it was pointed out to him that he was entitled to a pound of flesh, but not a drop of blood.

‘Bad faith’

Mhlambi found that Eskom acted in bad faith by executing the attachment while an inter-governmental dispute resolution process was ongoing. Although Eskom stated that this process failed, it did not raise any concerns in that forum and did not provide any detail to the court to substantiate its contention that the inter-governmental process failed.

The court therefore sent Eskom packing – and back to the inter-governmental process, which is conducted in terms of the Inter-governmental Framework Act.

It is against this finding that Eskom now wants to appeal.

The municipality contends that Eskom was opportunistic and reverted to the attachment, because it knew Maluti was due to receive one of its three annual grant payments from national government, totalling more than R200 million.

Eskom however insists that Maluti owes it R5.4 billion in unpaid bulk purchases and accuses Maluti of failing to stick to payment arrangements.

Amount disputed

According to Maluti, Eskom is not telling the whole truth. Municipal manager Futhuli Tseko Mothamaha is disputing the amount and says the Eskom bill contains numerous vague administrative charges.

The municipality points out that 100 of its largest customers, representing 80% of its electricity revenue, already pay their municipal electricity bills directly to Eskom. That includes Maluti’s mark-up.

The agreement reached with Eskom at the inter-governmental forum in April last year required that Maluti pay Eskom a once-off R15 million and thereafter 20% of its electricity revenue every month.

This, the municipality maintains it did.

Eskom nevertheless relied on Maluti’s non-compliance with a lesser condition to attach its bank account.

The municipality has since asked Eskom to release R20 million for salaries and water treatment chemicals, but Eskom is only prepared to do so on totally unreasonable conditions.

Eskom wants:

• The inter-governmental agreement cancelled;
• Maluti to pay its total bill, which includes the electricity used by the 100 largest users, to Eskom every month – notwithstanding the fact that those users pay Eskom directly;
• The balance in Maluti’s bank account paid to Eskom;
• Eskom to take the municipality’s fixed property as security for non-payment; it reserves the right to once again attach its vehicles and bank account; and
• The municipality to pay all legal costs at the highest punitive scale.

Maritz says these conditions are simply impossible to comply with.

He says Eskom is trying its level best to get away from the inter-governmental process, because there Eskom’s own failure to sign a service delivery agreement with the municipality for distributing electricity in its area of jurisdiction, will also be addressed.

Such an agreement will entitle the municipality to a surcharge for which it believes it has a valid counter claim.

Maritz says the attachment of the municipal bank account serves no purpose and merely destroys what is left of struggling municipalities.

He says the issues are not unique to Maluti and calls on national government to urgently address the relationship between Eskom and municipalities and how it impacts on municipal financial sustainability.

Read:
Eskom gets tough with errant municipalities, grabs cash and land
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