The settlement agreement entered into by Eskom and the City of Joburg’s City Power has set a necessary precedent for resolving disputes among state institutions. This is according to electricity minister Kgosientsho Ramokgopa who announced the deal alongside Mayor Dada Morero ending a longstanding dispute between the two institutions resulting from disagreements over billing particularly during loadshedding.
Ramokgopa commended the two institutions for agreeing to deal with the matter outside court. The minister said he has appointed the South African Energy Development Institute (Sanedi) to handle the dispute and present a technical report that will include recommendations on what should happen going forward.
“We cannot as the state be the ones clocking the courts. the agreement and commitment from both Eskom and the municipality, of course City Power is confirmation that intergovernmental relations are a way to go for us when there’s disagreements. the courts should really be a last resort,” said Ramokgopa.
Ramokgopa announced the deal as:
• City Power will pay an amount of R3.2 billion to Eskom over the next four years
• Eskom will write off some R830 million in penalties and related costs
“We have accepted that there are major challenges with regards to tariffs during winter. There is a time of use and during winter, the tariff is particularly heavy, and households, industries and customers find it very difficult to meet their obligations. So, we have accepted that during winter periods, there will be relief in relation to the payment of the R3.2 billion,” said the minister.
He said the amount being written-off by Eskom was accrued through interests including on the disputed bill.
“We have been able to write off that R830 million as a result of firstly, they don’t have to pay interest on that which is owed. Eskom has also conceded with regard to the load shedding estimations and also the penalties that have to do with notifiable maximum demand. So, all of those have been removed…totalling to R830 million and that’s the concession that Eskom has made,” he explained.
“The Minister said the resolution of the dispute between the two entities can be used as a template for other struggling municipalities,” he said.
Both City Power CEO Tshifhularo Mashavha and Morero welcomed the agreement which Ramokgopa said would pave the way for similar deals in other disputes.
“If we can tackle this and fix it in Johannesburg then we can deal with other problems elsewhere in the country, it can’t get bigger than this because Joburg is a big place,” he said.