No mercy from Eskom for cash-strapped City of Tshwane

Despite its extremely aggressive revenue collection campaign, the liquidity squeeze has caught up with the City of Tshwane, leaving it with an empty purse and unable to pay Eskom the R908 million that was payable on June 17.

Eskom said in a statement on Monday that the capital city was only able to make two payments since – R10 million on June 23 and another R20 million a week later.

Read: Tshwane challenges Eskom’s plans to supply Mooikloof Mega City

The national power utility says it escalated the matter to DA mayor Randall Williams, who leads a multi-party coalition government, and asked him to ensure payment is made by June 30. This did not happen and instead the City of Tshwane tried to offer to pay through a payment arrangement for the outstanding R878 million, which was rejected by Eskom.

This is the second time this year the city has been publicly shamed by Eskom.

Williams responded angrily in January when Eskom also went public about an overdue payment by the city. At that stage the City of Tshwane owed Eskom R635 million that was payable on January 18. Williams had met with Eskom and the city had made a commitment to make the payment. He called Eskom’s public disclosure “disingenuous”.

In its statement on Monday Eskom referred back to the incident and added: “Out of the eight metropolitan municipalities in the country, the City of Tshwane is the only one with erratic payments.”

This has been going on for the past year, according to Eskom.

In a statement issued by the City of Tshwane on Monday afternoon, the city stated it “has communicated with Eskom and provided them with a payment schedule of our debt.”

Liquidity problems

The city added that it has been battling liquidity problems due to low collections rates in the previous financial year and that the amount will be paid in full by July 7.

This may cost Tshwane ratepayers dearly, as Eskom is known to charge interest on late payments at a rate of prime plus 5%.

The city has in the meantime relaunched its #TshwaneYaTima revenue collection drive, in an effort to boost its collection rate.

In February it managed to collect hundreds of millions of rands by disconnecting properties where rates and taxes were in arrears. These included the well-known Sheraton luxury hotel, government buildings and businesses.

Read:
Gautrain resolves its water and electricity dispute with City of Tshwane
Gautrain operators to seek high court interdict against City of Tshwane

Even the official presidential residence Mahlamba Ndlopfu barely escaped the same fate when a credit on another government account was moved to that of the Bryntirion Estate that houses the residence, OR Tambo House, the official residence of the deputy president, the presidential guest house and several ministerial residences.

For the last two years the City of Tshwane has been performing very poorly in the annual Ratings Africa Financial Sustainability Index, with a point of 29 out of 100 in the financial year ended 31 July 2021.

In its comments, the Ratings Afrika analyst Leon Claassen said: “City of Tshwane’s overall score of 29 represents very low financial sustainability and some fluctuation over the last couple of years. This is caused primarily by very low liquidity, weak operating performance and a high debt burden.”

The drastic deterioration of City of Tshwane’s financial sustainability in 2020, from 34 points the previous year to 21, came after extreme political instability during which it was unable to hold council meetings due to disruptions by the ANC and EFF.

The Gauteng Provincial Government placed the capital city under administration, a decision the DA challenged in court and which was later declared unlawful.

Apart from recent events, the city also defaulted on its payments for bulk purchases from Eskom and Rand Water in September 2009 under the leadership of then ANC mayor Dr Gwen Ramokgopa. At the time Ramokgopa, who recently moved from the Presidency to a top role in Luthuli House, denied that the city was in a financial crisis, saying instead that it had to be congratulated for the way it managed its finances.

eThekwini to share the load shedding load

Meanwhile, in a joint statement on Monday, Eskom and the eThekwini (Durban) metro announced that eThekwini has agreed on a process to resume with the implementation of load shedding.

Following the floods in April the metro has been exempted from load shedding due to the damage to its distribution system and the fact that its electricity load was considerably reduced anyway.

The statement reads: “Importantly, there is agreement that the integrity of the electrical infrastructure was so severely compromised, that if parts of the infrastructure and loads were to trip either through a manual intervention (load shedding) or an electrical fault, it is possible and likely that the municipality grid could be even more severely damaged, thus further lengthening the duration of the outage.”

Read: SA’s worst week of load shedding to hit economy hard

“Both Eskom and the municipality are mindful that further electrical damage would severely compromise the municipality’s current water rationing program that was introduced immediately after the disaster to protect the municipality’s water supply which was also severely damaged during the floods. To-date in many areas water supply has not been restored.

“As a result there is agreement that the municipality is currently operating in an emergency capacity for both electrical and water services. The municipality has agreed on the process for the soonest implementation of load shedding to assist Eskom to mitigate the risk of a national grid collapse. The municipality has further assessed the long-term strategy to implement load shedding as soon as possible to the equivalent load as was the case prior to the disaster,” the statement adds.