City Power has entered into a settlement agreement with Eskom to pay R3.2bn over four years, following months of mediation on the longstanding billing.
The agreement, announced at a briefing on Tuesday, follows an investigation by the South African National Energy Development Institute (Sanedi), which was brought in to assess discrepancies in how Eskom had billed City Power, particularly during periods of loadshedding.
Electricity minister Kgosientsho Ramokgopa said the resolution brings an end to a complex impasse that had posed a threat to service continuity in Johannesburg.
“City Power, I want to emphasise, has done everything possible to maintain and pay the current account even through all these difficulties,” he said.
We have accepted that there are major challenges, not subject to Joburg only, with regard to tariffs during winter. Households and industries find it difficult to meet their obligations during this period and there will be relief,
— Kgosientsho Ramokgopa, electricity minister
Ramokgopa said part of the settlement includes a significant concession by Eskom, which agreed to write off R830m related to estimated billing and penalties incurred during power cuts.
“Eskom has conceded in regard to the periods of loadshedding and the estimation and also the penalties that have to do with the notifiable maximum demand,” he said.
He said no interest would be charged.
“The expectation is to maintain the current account and we are very excited about this development,” he said.
The billing dispute prompted Ramokgopa and Joburg mayor Dada Morero's intervention who led a series of high-level engagements.
As part of the deal, Ramokgopa said relief will also be provided to Johannesburg customers during winter, when tariffs typically spike.
“We have accepted that there are major challenges, not subject to Joburg only, with regard to tariffs during winter. Households and industries find it difficult to meet their obligations during this period and there will be relief,” said Ramokgopa.
Meanwhile Ramokgopa said municipal debt to Eskom has ballooned to R100bn
“We are getting into a situation here in the country where we see new dimensions of the energy problem. The economy is not growing, and more and more of your customers are unable to pay. Industries are closing, and City Power is no longer collecting what it used to collect because people are defaulting,” he said.
Ramokgopa said the equation of debt is unsustainable.
“Residents owe City Power, and in return, Eskom is owed. By the way, the number for municipalities shows that households owe them close to R370bn, and when I was here [in November], municipalities owed Eskom close to R98bn. I’m sure that number is now over R100bn. That equation is unsustainable by any measure. Municipalities find it very difficult to collect because consumers are under financial strain,” he said.
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