By Lehlohonolo Lehana.
State owned power utility Eskom announced on Thursday night that it has started the process to cut power supply to Johannesburg’s City Power due to unpaid bills.
In a statement, “Eskom said it had served a notice of intention to interrupt the electricity supply to the city. It explained that despite “all the avenues that Eskom explored and efforts to accommodate the CoJ, the matter has reached a point where Eskom can simply no longer afford to accommodate the CoJ without putting further financial strain on and harming its own business”.
Eskom said it could no longer absorb the costs of Johannesburg’s unpaid electricity bills without risking further financial strain on its operations.
It said when municipalities like the CoJ do not pay it on time, it is forced to secure costly loans to fund essential operations, leading to an exponential rise in electricity costs.
“The failure to pay by the CoJ is contributing to the growing municipal debt which, as at the end of September 2024, stands at R90 billion, “Eskom said.
“Eskom’s financial sustainability and ability to supply electricity at affordable prices is contingent upon its ability to improve its balance sheet by increasing revenue and reducing expenses.
Revenue can only be increased by collecting electricity debts and/or increasing electricity tariffs,” it said.
Eskom said the CoJ has acknowledged its debt, but refuses to pay the full amount of its monthly bill.
“The CoJ alleged, without substantiating their claim, that Eskom is overbilling it on some of its supply points. It is for this reason that the CoJ is applying set-off against the monthly bills raised by Eskom, which is contrary to the electricity supply agreement and the agreements reached with its Chief Financial Officer (CFO), Rendani Sadiki, and the Chief Executive Officer (CEO) of City Power, Tshifularo Mashava, and City of Johannesburg Management.
“In more than one meeting, it was agreed that the CoJ would continue to pay whilst the alleged overbilling is investigated; this undertaking has been reneged on, “Eskom said.
The utility said the Constitution and the Intergovernmental Relations Framework mandate the CoJ to assist Eskom in delivering affordable electricity, a responsibility it claims the city has failed to meet by neglecting payments for its bulk electricity supply.
Eskom said it will issue a public notice on Friday (8 November) inviting submissions from all interested and affected parties on why it should or should not proceed to interrupt electricity supply.
It said a final decision on whether it will proceed with the interruption will be communicated after a review of the representations received through the PAJA process on 12 December 2024.
Meanwhile Eskom has signed a R125-million grant agreement with Agence Française de Développement (AFD) to support the development of the proposed Tubatse pumped storage system project, located in the Elias Motsoaledi local municipality in Limpopo.
The 1.5 GW Tubatse project, which would be pursued as a public-private partnership, could comprise four 375 MW units and have a storage capacity of 21 GWh.
Eskom will use the grant funding to procuring the services of a transaction adviser to conduct a feasibility study and finalise a business case for the project in the first quarter of 2026.
The transaction adviser will also support Eskom in procuring a private developer for the project’s implementation by 2033.
Eskom is currently disallowed by the terms of a National Treasury debt-relief programme from raising new debt for generation projects, but has nevertheless signalled to the market that it is working on a 20 GW project pipeline that could be pursued in partnership with the private sector.