The Johannesburg High Court has dominated that Eskom can connect the bank accounts of the City of Matlosana Local Municipality within the North West Province after the municipality reneged on earlier undertakings and ignored two courtroom orders directing it to settle a whole bunch of tens of millions of rands in unpaid electrical energy payments.
Acting Judge Grace Goedhart stated Eskom was certain by the Public Finance Management Act to take efficient and acceptable steps to gather all income attributable to it.
“It has given the municipality ample opportunity to comply with its undertakings,” she stated.
The municipality acknowledged its indebtedness to Eskom on the finish of November 2019. It owed greater than R383 million on the time.
A settlement settlement, detailing what needed to be paid and when, by way of each the present and arrears account, was made an order of courtroom in August 2020.
The municipality reneged on the deal.
In December 2020, Eskom returned to courtroom and secured one other order, confirming a second reimbursement settlement, by way of which the municipality would pay R120 million inside per week, after which month-to-month instalments to repay the arrears and sustain with its present account.
The municipality once more didn’t adjust to the courtroom order, and in May, Eskom issued a writ of execution to connect moveable property.
At this stage, the municipality sought to have interaction with Eskom, proposing session by way of processes below the Intergovernmental Relations Framework Act (IRFA). But Eskom stated that course of didn’t have an effect on the December courtroom order which the municipality was obliged to adjust to.
In August 2021, Eskom issued a writ of execution for R228 million and instructed the Sheriff to connect two of the municipality’s bank accounts and to take management of the cash in them.
The municipality then launched the appliance which got here earlier than Judge Goedhart, searching for an order prohibiting Eskom from taking the cash pending the end result of the IRFA dispute decision course of.
In its software, the municipality stated it had money movement issues due to low charge of collections and the affect of Covid. The attachment of its bank accounts meant that it was unable to pay service suppliers, its staff, grants to beneficiaries and its day-to-day working prices. It was impacting on the group as an entire and its means to render constitutionally mandated companies.
It denied being in “wilful default” of the order.
But Eskom stated the municipality had not, as at September 2021, declared a dispute by way of the Act. Nor had it furnished monetary paperwork requested to allow Eskom to evaluate the shortcoming of the municipality to pay what it owed.
“The obvious consequence is that the arrear debt is escalating … in September 2021, it now owed more than R814 million,” the decide stated.
The energy utility had stated that despite the work of an inter-Ministerial Task Team, municipal debt owed to it had “grown exponentially”, rising to R35.7 billion by the top of April 2021. Matlosana Local Municipality was one of many prime 20 “defaulting municipalities”.
Judge Goedhart stated it was self-evident that municipal debt had turn out to be a nationwide disaster and no service supplier may proceed to offer companies with out being paid.
She stated the municipality had solely raised the opportunity of a dispute decision course of after Eskom had issued the primary writ.
Eskom had agreed to have interaction however had cautioned from the outset that negotiations didn’t absolve the municipality from compliance with the December 2020 courtroom order.
“On the facts of this matter, Eskom has done what was within its powers to do and it has given the municipality ample opportunity to comply with its undertakings and the court orders,” Judge Goedhart stated.
“The IRFA, and the processes contemplated by it, does not present a basis to frustrate a writ which has been issued in terms of a valid and executable court order. The municipality is expected and required to be a role-model and to conduct itself in an exemplary manner in its dealings with others, including other organs of state,” she stated, describing the bid for the interdict as being “unacceptable”.
She stated the municipality had not given any particulars of its precise assets and what steps it had taken to make sure compliance with the courtroom orders to which it had agreed.
She famous that it might be “inimical to the rule of law and a constitutional state” if organs of state, such because the municipality, who did not adjust to courtroom orders have been permitted to “uplift” writs issued because of non-compliance.
She dismissed the municipality’s software, with prices.
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