The legal battle between the City of Joburg and power utility Eskom is set to continue. The city’s power utility, City Power, has been granted leave to appeal a June High Court ruling that it owed Eskom R1 billion in unpaid bills.
Eskom announced in June that it had emerged victorious in court, where it was seeking relief and an order that the City of Joburg pay it R1 billion plus interest for unpaid electricity use.
The utility took the matter to court because it said that the City of Joburg and its utility, City Power, had been defaulting on their electricity accounts since October 2023.
While it was seeking just over R1 billion plus interest accrued for the cost of bulk electricity supply services for March, Eskom noted that the outstanding amount had ballooned to R3.4 billion by the time the application was lodged.
In turn, the City of Joburg laid a counterclaim against Eskom, alleging that it was, in fact, the aggrieved party.
The city maintained that Eskom not only bypassed efforts to engage and mediate with it—instead opting for court processes—but also alleged that Eskom owed it R3.4 billion in overcharges and overbilling.
The court ultimately ruled against the city and, notably, dismissed its counterclaim.
However, the saga is not over.
Following consultation with legal representations, City Power submitted an application to appeal the court’s ruling on Tuesday, 6 August 2024.
The presiding judge “was convinced by the arguments presented and granted leave to appeal, citing reasonable prospects of success in the appeal court”, the city said.
“Furthermore, the court dismissed Eskom’s conditional application for City Power to pay the disputed amount pending the finalisation of the appeal application,” it said.
The judge ruled that Eskom would not suffer irreparable damage and suspended the order until the appeal court decides otherwise. In addition, Eskom was ordered to pay the costs of two legal counsels.
“City Power welcomes this development and looks forward to presenting its case in the appeal court,” it said.
Eskom owed billions
Eskom’s action reflects the utility’s growing frustration over unpaid bills by municipalities in South Africa, and big metros in particular.
The utility has gone the legal route against other cities in the past as well, most notably the City of Tshwane.
According to energy minister Kgosientsho Ramokgopa, Eskom is owed over R78 billion by South African municipalities, with reports putting the figure as high as R82 billion. This is a cumulative number from over the years, and Ramokgopa said most of it is irrecoverable.
However, it puts Eskom in a very difficult position. The group reports multiple-billion-rand losses each year and has a mountain of debt—all while capital expenditure requirements to secure the country’s grid are growing.
What’s owed to Eskom pales in comparison to what is owed to municipalities, though.
The minister pointed out that municipalities are owed R349 billion by various customers, including households, businesses and government.
This, among various other governance issues (corruption, mismanagement and maladministration), has led to a significant deterioration of infrastructure and service delivery in many places.
Joburg collapse
The City of Joburg has been thrust into the spotlight for this in recent months, where it has been described as collapsing due to these failings.
The city is said to need R221 billion to catch up on maintenance and overdue upgrades across its collapsing road, power and water networks.
Residents are hit with regular power outages—not related to load shedding—collapsed infrastructure is left in disrepair, and it faces growing maintenance backlogs while struggling to bill and collect revenue to cover the costs.
City Power has embarked on a string of missions in recent months into areas where electricity theft and vandalism are rife to clear up illegal connections and recover stolen cables to counter some of this. However, load reduction remains in effect.
These issues are exacerbated by an unstable political arena, where infighting among cobbled-together coalitions and petty squabbles among politicians often take precedence over service delivery and residents’ needs.
The city has seen nine different mayors since 2016 and five since the most recent local election in 2021. The latest mayor, Kabelo Gwamanda, resigned this week, opening the door for yet another change of governance.
Read: Joburg is crumbling – and the hole is R221 billion deep
