In its efforts to recover more than R3.4 billion in unpaid debt owed by the Matjhabeng Local Municipality in the Free State, South Africa, the municipality has agreed to hand over to Eskom 139 farms belonging to the municipality as security on the debt.
The farms are valued at approximately R2.5 billion. The title deeds of the farms will be endorsed in favour of Eskom until the debt dispute between Eskom and the municipality is finalised.
The power utility stated that this agreement has been made the order of high court in the Free State division. “This step on the part of Eskom is a result of the repeated failures by the municipality to adhere to its payment obligations to Eskom for the bulk supply of electricity,” the utility explained.
Eskom furthered stated: “As part of the agreement, the municipality has withdrawn its application in which it sought to uplift the attachment of its bank account by Eskom, which was granted on 4 September 2020. Eskom has agreed to uplift the attachment of the account and the account was handed back to the municipality. The funds in the account, namely R2.7 million, will remain attached and in the care of the Sherriff of the Court.”
Eskom has been involved in numerous court processes since 2014 when the municipality’s outstanding debt totalled R372 million and employed other collection mechanisms to recover the funds. Eskom noted that the municipality has consistently failed to honour its obligations and payment agreements, as well as court orders, resulting in the debt escalating to R3.4 billion over the period.
“The total outstanding municipal debt of R31 billion as at end July 2020 continues to threaten Eskom’s sustainability. Municipalities have a responsibility to fulfil their financial obligations for the bulk supply of electricity,” the power utility concluded.