Although, as reported previously, Eskom has been dealt a blow in its bid to recover unpaid bills after the Constitutional Court upheld a ruling by the SCA that the power utility’s decision to disconnect electricity to two defaulting municipalities was irrational, the implications for the state are much broader.

The SCA concluded that Eskom’s decision to interrupt bulk electricity supply to the Emalahleni and Thaba Chweu local municipalities – thus harming law-abiding third parties who paid their electricity dues to the municipalities – was irrational as Eskom knew full well it would not result in the financially-strapped municipalities settling their debt.

Business Day notes Sakeliga, the lobby group that largely represents the interests of Afrikaans business owners, joined both cases as a friend of the court.

The group’s CEO, Piet le Roux, said yesterday the Constitutional Court’s decision heralded a new era for electricity security in local towns and for limiting the harms stemming from disputes between failing organs of state by binding them to intergovernmental dispute resolution, and ordinarily barring them from withholding services from private, third parties.

While the implications of the ruling are obvious for the case of disputes between Eskom and municipalities, the real strength of the judgment goes much further, Le Roux said.

At its core, the judgment proscribes all organs of state, not only Eskom and municipalities, from making their internal disputes the problem of private, third parties.

Eskom spokesperson Sikonathi Mantshantsha said the Constitutional Court ruling will hurt the power utility’s drive to collect debt.

‘This development is noted, and it puts yet another hurdle in getting these municipalities to honour their obligations.’

Le Roux noted Sakeliga is pursuing a related matter. He pointed out that while the Constitutional Court ruling secures local energy provision, it does not ensure Eskom receives the money end-users pay.

Hence, he said, Sakeliga has launched another court challenge to bar two errant municipalities from receiving direct fees for crucial services, reports Business Day.

That challenge targets the Ditsobotla (formerly Lichtenburg and Coligny) and Naledi (Vryburg) municipalities in the North West, and the outcome could set a legal precedent in terms of how similar cases of non-payment are handled.

Sakeliga wants the municipalities to be placed under the administration of a special independent paymaster, meaning that they will not receive direct payments from residents and businesses for electricity and water.

According to Business Day, Sakeliga says millions of rands for electricity, water and sewerage services and other infrastructure projects are mismanaged and disappear each month, at the expense of businesses and job-creation efforts.

Full Business Day report