Eskom has attached the bank account of the struggling Maluti-a-Phofung Local Municipality in the Free State over an outstanding R5.3 billion account as the power utility fights to rein in municipal debt.

The state-owned power utility said the account was attached on July 21 and funds in the account would be transferred to its coffers to help it recover a portion of the debt owed. Eskom stated that the decision was taken after “repeated failures by the municipality to adhere to its payment obligations”.

The debt goes back to October 2013.

Eskom provides bulk supply of electricity to municipalities and is owed R30.9 billion for its services, which has contributed to its weak financial position. The non-payment of services has been cited by the company as one of the main areas affecting its revenue collection, further impacting its infrastructure expenditure as well as the maintenance of its aging fleet of coal-fired power stations.

Maluti-a-Phofung, which has in recent months been hit by violent community protests over poor delivery of services, is not the first municipality that has landed in trouble with Eskom. Assets of Emfuleni Municipality were in March seized by the company over unpaid debt after it obtained a court order for the action.

The parties later reached an agreement, leading to a temporary suspension of the order, with Emfuleni committing to pay R50 million of its R1.8 billion historical debt.

Eskom in March revealed the only Gauteng province municipalities that are not indebted to it were Ekurhuleni, the City of Tshwane, Midvaal and Lesedi.

Source: fin24