Indebted municipalities have been handed a reprieve from scheduled power outages after Public Enterprises Minister Lynne Brown ordered Eskom to give the councils until the end of January to come up with payment plans.
This comes after Eskom said on Thursday that scheduled interruptions at Naledi, Lekwa-Teemane and Kgetlengrivier in the North West, and at Ubuntu and Renosterberg in the Northern Cape would continue.
Brown on Thursday urged affected municipalities to work towards settling their arrears, saying their growing debt could undermine efforts aimed at getting Eskom back on sound financial footing.
"The security of future revenue is paramount to Eskom’s sustainability. It is critical for all municipalities to institute pre-paid billing to help build a payment culture. A healthy Eskom does not only meet its social mandate, it also contributes to the positive sovereign rating of SA," Brown said.
Eskom said the Electricity Regulation Act empowered the utility to interrupt power to nonpaying councils, but it would interrupt power supply only in the mornings and afternoons.
Eskom agreed to postpone scheduled power interruptions at Lekwa Local Municipality until late February.
This was much to the relief of Astral Foods CEO Chris Schutte, who described any such power disruptions as "calamitous" for businesses. Astral’s largest feed milling plant — the biggest on the continent — and its poultry processing operations are located in the municipality. The majority of its broiler farms are in the Standerton area.
"If Eskom is not paid or a repayment agreement is not reached with Lekwa, the power interruptions — and especially the impending threat of permanent cuts — will have disastrous consequences for Astral.
"We will pursue legal recourse to protect our business, as we cannot subject our operations to the municipality’s indifferent approach to payment," said Schutte.
The South African Chamber of Commerce and Industry said this week it did not think the interruptions were a fair solution for businesses in the affected councils.
However, Middelburg Chamber of Commerce and Industry CEO Anna-Marth Ott said that although scheduled power interruptions would hurt, businesses in the region were resilient enough to adapt to power disruptions in the long term. Ott warned that an unintended consequence of power disruptions would be
that business would seek alternative sources of electricity, cutting off a vital revenue stream for municipalities.
"We don’t really get involved in the domestic issues of business. All we can do is lobby for specific things.
"We knew something needed to happen here. The decision [to cut power] is one we are against. Sometimes we have to say something harsh to get a positive reaction.
"But we have to look at other options," said Ott.
"Mining and manufacturing are the major consumers of Eskom, so they are resilient as they were prepared to stop working to ensure there is enough for residents.
"Businesses on the municipal grid are doing what they can, but the best we can do is hope the municipalities and Eskom come to an agreement," said Ott.
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