The Supreme Court of Appeal recently delivered judgment (09 Mar 2022) in favour of Eskom, and clarified the electricity supplier’s right to payment for its services rendered to municipalities.
Letsemeng Local Municipality entered into an agreement with Eskom on 13 February 2006. Eskom would supply the Municipality with electricity and, in return, be paid for that service rendered. The Municipality reneged on the agreement on two separate occasions and, with the threat of its electricity supply being disconnected, Letsemeng approached the High Court on an urgent basis.
Despite the Municipality’s undertakings to attend to the payment of the outstanding accounts and the non-payment thereof, Eskom on numerous occasions made attempts to assist the municipality with the structuring of its debt by either providing the Municipality with Acknowledgment of Debt agreement or a Repayment Plan.
A local government has a duty to strive to achieve its objective to ensure that services are provided to its citizens. As electricity is an important basic municipal service, the local government is therefore obliged to provide it. Therefore, a reciprocal obligation is created between Eskom and a municipality: Eskom will provide bulk electricity; and the municipality is obliged to pay for this service.
The SCA confirmed that Eskom has the right to receive payment for the bulk electricity it supplied. As a matter of law and principle, the municipalities are not entitled to receive electricity without paying for it. In this regard and in confirmation with the SCA, delinquent municipalities have no legal basis for failure to make payments.
The Letsemeng Local Municipality includes suburbs such as Jacobsdal, Koffiefontein, Luckhoff, Oppermansgronde and Petrusburg. Following the judgment, the municipality said its legal team will present the outcomes of the case before a special council sitting.
