Eskom has taken legal action against Emfuleni Municipality by freezing four of its bank accounts, attempting to recover over R8 billion in unpaid electricity bills.
Story Summary:
- Eskom freezes Emfuleni’s bank accounts: Eskom has legally seized four of Emfuleni Municipality’s bank accounts due to an R8 billion electricity debt, stemming from non-payment since 2018 and the municipality’s failure to comply with the National Treasury’s Debt Relief Program.
- Impact on service delivery: With the accounts frozen, Emfuleni’s ability to deliver essential services like water, waste removal, and public safety is severely restricted.
- Eskom’s debt recovery efforts: Emfuleni’s arrears represent a significant portion of the R82 billion owed by municipalities to Eskom.
Eskom guns for recovering Emfuleni municipality’s R8bn debt
This step follows Emfuleni’s failure to comply with the National Treasury’s Municipal Finance Management Act (MFMA) Debt Relief Program, which offers conditional debt write-offs and financial support to struggling municipalities.
The municipality, however, repeatedly breached the program’s conditions, which resulted in Eskom’s decision to enforce the seizure of accounts.
The action is part of Eskom’s broader strategy to recover billions of rands owed by municipalities.
As of August 2024, Emfuleni’s arrears stood at R8.05 billion, making up 10% of the R82 billion municipal debt owed to Eskom. The utility provider has exhausted legal and mediation avenues since 2018, trying to get the municipality to meet its obligations.
Eskom emphasised that Emfuleni’s continued failure to pay for bulk electricity not only affects its own financial health but also jeopardises service delivery across South Africa.
According to Eskom, recovering this debt is critical to maintaining the nation’s electricity grid and ensuring continued electricity supply to Emfuleni’s residents.
What happens when a municipality’s bank accounts are frozen?
Freezing a municipality’s bank accounts can have severe and far-reaching consequences.
Firstly, all income flowing into these accounts is immediately redirected to Eskom, which means the municipality has no access to funds for daily operations.
This severely restricts its ability to pay staff, maintain infrastructure, and deliver essential services like water, waste collection, and public safety.
In Emfuleni’s case, this move means any funds the municipality collects through taxes or service fees will be used to settle its debt to Eskom.
The freezing of accounts not only affects internal operations but also risks disrupting vital services to residents.
Service disruptions could lead to public protests, as citizens bear the brunt of halted water services, waste removal, and potentially reduced or cut electricity supply if the debt situation continues to worsen.
Additionally, the situation erodes public confidence in local governance.
Eskom’s overall debt situation in 2024
Eskom’s challenges with municipal debt form part of a larger issue.
By the end of March 2024, Eskom reported that total municipal arrears stood at R82 billion, an increase of nearly R16 billion over the previous financial year.
Emfuleni’s debt of over R8 billion is one of the largest single contributions to this total, alongside other high-debt municipalities like Maluti-a-Phofung and Matjhabeng(
The state utility provider has struggled with its own financial challenges, reporting significant annual losses.
As of 2024, Eskom’s debt topped R450 billion, forcing it to prioritise debt recovery strategies like the freezing of bank accounts in municipalities.
Eskom’s financial instability has a cascading effect, contributing to ongoing electricity challenges such as load shedding, as the utility lacks the funds to invest in critical infrastructure.
Despite government interventions like the MFMA Debt Relief Program, Eskom continues to face difficulties in collecting arrears from defaulting municipalities.
This makes actions like the freezing of Emfuleni’s accounts a critical component of Eskom’s recovery efforts.
