During March 2019, Eskom issued a public notice of intention to disrupt the electricity supply to Makana Municipality with effect from 2 April 2019 due to non-payment. Local stakeholders then initiated legal proceedings against Eskom and the municipality among other respondents to prevent the disruption of electricity supply, as it would negatively affect the business economy and livelihoods of our residents.
The Grahamstown High Court on 28 March 2019 issued an order that the disruption be held in abeyance until 6 June 2019 on the condition that the National Treasury and Department of Co-operative Governance and Traditional Affairs (COGTA) facilitate an affordable and reasonable payment agreement between Makana Municipality and Eskom. Below is the update on the extent to which the municipality has kept its undertaking in this regard.
The billing and payment statistics since January 2018 in an effort to bring the Eskom account up to date are as follows:
Contrary to public perception, the municipality has been paying regularly the Eskom Account, but fell approximately R20 million short over a 15-month period to keep the Eskom account current. The difficulty often arises in August and September each year when the accounts run up to R16 million. To partially mitigate this risk, Eskom agreed to allow the municipality to exclude a R7m instalment on the payment agreement in July each year, in order to use these funds to pay the current account. A shortfall will still, however, arise if consumers do not pay their bills.
All parties present were eventually convinced that the proposed payment agreement was beneficial to both Eskom and Makana Municipality and that it could be submitted to Council for approval. The Council on 31 May 2019 approved that the arrears of R44 156 057.49 be paid in six instalments as follows:
- R7 000 000 before end December 2019;
- R7 000 000 before end March 2020;
- R7 500 000 before end December 2020;
- R7 500 000 before end March 2021;
- R7 500 000 before end December 2021;
- R7 656 057.49 before end March 2022.
In addition to the above, the municipality is obligated to pay the monthly current account on or before the due date. Post the agreement, the high winter Eskom accounts kicked in and it was successfully paid in full on each due date as follows:
The payment obligation is our biggest challenge, as the municipality is not able to collect all its revenue due to non-payment by residents, businesses, schools and government departments in particular. The current debt book as at 31 August 2019 reads as follows:
- Residents – R 457 342 972
- Business – R 47 541 543
- Government – R 42 059 991
- Total Debt – R 546 944 506
Makana Municipality further notes that some residents are also withholding payment due to dissatisfaction with service delivery. Those concerns are being addressed on an ongoing basis as we try to improve the quality and consistency of service deliveryf. The reality is that to render services, the municipality requires money which many residents are withholding and thus preventing the financial turnaround of the municipality.
In conclusion, Makana Municipality strives to improve its payments to service providers and Eskom in particular to minimise the disruptions to the local economy.
The sustainability of paying service providers and Eskom is largely dependent on residents paying their municipal accounts in full and on time. We, once again, express appreciation to the loyal paying customers who contribute to the sustainability of the municipality.
Honourable Executive Mayor Councillor Mzukisi Mpahlwa