Eskom and a group of businesses strike a landmark deal, sidelining the local municipality

A landmark agreement between Eskom and businesses in a Free State town may sideline more dysfunctional municipalities in future.

Rapport reports that the Harrismith Business Forum signed a contract with Eskom on Friday whereby the power utility will deliver power directly  to the town’s 100 biggest power users – bypassing the local municipality completely.

The Maluti-a-Phofung municipality owes Eskom more than R4bn in unpaid electricity bills – the biggest outstanding municipal power account in the country. The municipality has a monthly electricity bill of R180m, which was last paid years ago.

Eskom has cut off electricity to Harrismith a number of times over the past five years, which has caused damage to its sewage system.

The agreement between the businesses and Eskom is the result of a legal battle that dragged on for more two years. It could set a precedent whereby businesses in other town could also bypass municipalities – and avoid having their power cut off, Rapport reports.

Across the country, municipalities now owe Eskom R25.1bn – and this has grown by R5.2bn since April. Some rural municipalities are not paying Eskom the money they receive from businesses and households, who faithfully pay their power bills. Eskom often cut power to these non-paying municipalities – affecting those who have been paying their bills too.

Ben Deysel, chairperson of the Harrismith Business Forum, told Rapport that the local businesses and Eskom will split the bill for installing new electricity meters. Every business will get a reference number and pay for the electricity directly into a specific bank account.

Together, the 100 biggest businesses in the town pay electricity bills of R20m a month – which will now not go towards the municipal coffers. The businesses include Nestle, Shoprite Checkers, the plastic company Alpla and the carpet producer Nouwens.

Last week, an inter-ministerial Eskom task team – chaired by Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma – was supposed to brief the Standing Committee on Public Accounts on municipalities’ outstanding Eskom bills. But Dlamini was a no-show.

Recently, the ANC narrowly clung to power in the Maluti-a-Phofung municipality after a number of its counsellors resigned.

Article by Fin 24