<\/p>\n
The City Johannesburg\u2019s (CoJ) worsening financial position is further in the spotlight, with Eskom warning on Tuesday night that it may cut power to certain bulk supply points in the metro due to the city\u2019s ballooning debt and defaults on payment agreements.<\/p>\n
South Africa\u2019s biggest city and financial hub owes Eskom more than R6.8 billion in debt and current account obligations, according to the state-owned power company.<\/p>\n
Read\/listen:
City of Joburg\u2019s budget and mayor in crisis
Is Joburg financially attractive?<\/p>\n
\u201cAs a result of CoJ\/City Power\u2019s continued failure to honour its electricity supply agreement with Eskom, including repeated defaults, Eskom has been forced to issue a notice of its intention to reduce, interrupt and\/or terminate the supply of electricity to certain bulk supply points against CoJ,\u201d it said in a strongly worded statement on Tuesday night.<\/p>\n
Eskom noted that the CoJ and\/or City Power currently owes an arrear debt of over R5.25 billion, excluding the current account of a further R1.58 billion due on 5 June 2026.<\/p>\n
Payment obligations\u00a0<\/p>\n
\u201cEskom has been working with CoJ and\/or City Power for over two years to support the metro in meeting its payment obligations,\u201d it said.<\/p>\n
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\u201cEskom maintains it simply cannot be acceptable to the city\u2019s residents and all South Africans that CoJ\/City Power is collecting electricity revenue but failing to pay over Eskom\u2019s share,\u201d it added.<\/p>\n
CoJ and Mayor Dada Morero are yet to comment on Eskom\u2019s threat to cut or reduce power supply to the metro. However, Morero ironically cited lights still being on in the city in defending the metro\u2019s financial position recently.<\/p>\n
Eskom\u2019s statement comes as Finance Minister Enoch Godongwana demanded that the metro withdraw its pay increase agreement with municipal unions, warning that the city could not afford the hike.<\/p>\n
It also follows recent news that French development financiers denied CoJ further loans and credit rating agency Moody\u2019s has put the city on review for downgrades.<\/p>\n
Read:
Treasury threatens to cut City of Joburg funding
Godongwana\u2019s letter to CoJ sparks fears around property valuations
CoJ on review for rating downgrades by Moody\u2019s
Johannesburg woes deepen as key French funder rejects loan request
Suspension of CoJ bonds \u2018not a sign of financial distress\u2019<\/p>\n
Eskom warned on Tuesday that while it \u201ccontinues to focus on being cost-efficient\u201d \u2013 escalating municipal and metro arrear debt is undermining its efforts.<\/p>\n
\u201cEskom\u2019s financial sustainability and ability to supply electricity at affordable prices is dependent 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,\u201d it said.<\/p>\n
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\u201cAcross the country, many municipalities and metros are working with Eskom to develop sustainable debt solutions and Eskom is continuing to accelerate its support for this approach,\u201d it added.<\/p>\n
On 5 May, Eskom announced that nine municipalities have received council resolutions to sign Distribution Agency Agreements (DAAs) following consultation processes.<\/p>\n
\u201cEskom provides a solution to support municipalities and metros to sustainably deliver electricity. Eskom has developed the DAAs, which is a long-term, non-permanent, contract between a municipality or metro and Eskom, as part of the Active Partnering initiative,\u201d it said.<\/p>\n
Eskom stressed that the DAAs \u201coffer a suite of services and solutions aimed at restoring the sustainability of electricity provision in a municipality or metro, by enhancing its technical and financial sustainability\u201d.<\/p>\n
\u201cThe services include skill development and training, replacement or installation of smart meters, as well as Eskom collecting revenue on behalf of the municipality. Eskom is working nationwide to assist in the rollout of this initiative.\u201d<\/p>\n
Read:
Eskom\u2019s municipal agency agreement heads to court
Many a slip between municipal cup and Eskom lip?
Eskom sent to redraft \u2018one-sided\u2019 municipal distribution agreements<\/p>\n
#Eskom #warns #power #cuts #defaulting #City #Johannesburg<\/p>\n","protected":false},"excerpt":{"rendered":"
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