By ROD AMNER
Makana Municipality (MM) missed a 31 December Eskom payment deadline, in breach of the Grahamstown Business Forum (GBF) & Others vs Makana Court Order of June 2019.
The 2019 court order obliged the MM to commit to a three-year debt repayment plan servicing old and current debt. The municipality made those payments until December 2021, when it defaulted on a R7.5-million payment to Eskom.
Eskom spokesperson Athi Titus said the MM had responded to a breach letter and had promised to make arrangements to pay.
It has subsequently emerged in a MM Council meeting on Thursday 27 January that the municipality had been saddled with a cash flow problem at the end of 2021 because the National Treasury withheld a R6-million rollover of its Water Services Infrastructure Grant (WSIG). The R6-million was deducted from Makana’s December 2021 ‘equitable share’.
Treasury told Makana that “insufficient reasons had been provided for the commitments of this rollover”. The municipality has appealed.
In 2020/2021, National Treasury withheld the R4.4-million due to an Annual Financial Statement (AFS) error, which was later corrected in the Adjusted AFS. Proof of the corrected Unspent Grant Balance in the audited AFS was sent to Treasury, but the appeal was not granted.
Meanwhile, Grahamstown Business Forum (GBF) chair Richard Gaybba emphasised that since the Makana Municipality is in contempt of court, the GBF and other applicants should have been informed.
Gaybba said he was concerned that a cancellation of the payment agreement could have serious consequences for residents and businesses.
“We will need to warn them and hope that they pay December and January’s bill by the 8 February 2022. Makana has put the entire city at risk and is in contravention of the court order. The GBF, Makana Residents Association (MRA) and others have spent lots of time and money ‘securing’ the city’s electricity supply,” he said.
According to the final 2016-2021 Service Delivery Report released by former Executive Mayor Mzukisi Mpahlwa last year, the Eskom debt had been reduced from R85-million in June 2018 to R15-million in August 2021.
Makana owed a total of R101.2-million to creditors on 31 August 2021, according to Mpahlwa’s report.
Mpahlwa said the Municipality had resolved to settle all creditors by 30 June 2022 “except Dept of Water and San, which will be settled by 30 June 2024”.
Last year, the chair of the MRA, Sally Price-Smith, pointed out that a successful civil society court action had been responsible for forcing the Makana Municipality to make regular payments and reduce the Eskom debt.
Apart from removing the risk of Eskom cutting power to the town altogether, Price-Smith said the power utility had excluded the James Kleynhans Water Treatment Works from the load shedding schedule, enabling the one-day-on, one-day-off water supply to be sustained.
“Court action should not be necessary to force the paid administrators to do what they are renumerated well to do on our behalf,” she said.
“The elected officials should also be reminded that it is their responsibility to carry out oversight, and this kind of debt should never have accumulated when customers were paying for the electricity they received (plus 10%),” Price-Smith added.
See the original 2019 court order below: