Date: 10 December 2017 By: Andries van Zyl
Due to unforeseen circumstances, the Makhado Municipality recently reneged on an agreement to pay their Eskom debt.
During the municipality’s 84th Council meeting on 26 October, Council noted that due to unforeseen cash flow challenges, the municipality had to make alternative arrangements to honour their debt repayment agreement with Eskom.
Council resolved that their outstanding debt of R36 million will be paid back to Eskom in three instalments over three months. The first two debt repayments of R10 million each have already been paid in August and again in September. The last of the repayments was due on 30 November.
Municipal spokesperson Mr Louis Bobodi last week confirmed that all outstanding debt was paid in full. He explained that the municipality was forced to make alternative arrangement due to an unforeseen cash-flow problem. “Funds tied in investments were not readily available,” said Bobodi.
The issue has since been resolved. Last week, Eskom’s current account totalled R15 million. “Currently, we do not owe Eskom,” said Bobodi. Although Makhado’s Eskom account is up to date, it does not mean that the municipality does not struggle to recover outstanding monies from consumers. “Non-payment by customers and tampering of meters and reconnections are some of the challenges that we are facing,” said Bobodi earlier this year when also asked about their outstanding Eskom debt. He added, however, that they are addressing the issue. “We must ensure strict credit control to force residents to pay on default accounts,” said Bobodi.
In the meantime, Council is still pushing ahead with plans to upgrade the town’s main substation. They have already lodged an application to Eskom to upgrade the town’s bulk electrical capacity with 22 MVA to 66 MVA. At present, the municipality’s main substation has a notified maximum demand (NMD) of 44 mega volt amp (MVA).
The whole main substation upgrade is, however, an expensive venture. Earlier this year, during the 29 June Council meeting, it was resolved that the municipality’s Chief Financial Officer negotiates with Eskom on the security (deposit) of R129 million for the upgrade either by an appeal against the amount, or that arrangements be made with the banks to issue a bank guarantee for this amount. At that stage, Council noted with regret that should the current Department of Energy INEP allocation not be sufficient, the upgrade will only be paid for in 2018 and actual capacity availability in the main substation will then only be made in 2019.
Bobodi on Tuesday said that since the 29 June meeting, there were further discussions between the mayor‘s office and Eskom. “Eskom indicated that they will only be in a position to make 22MVA available in December 2019 due to the long lead time of specifically the new transformer that must be installed. We therefore requested an urgent temporary increase in capacity as an immediate option from 44 to 48 MVA as we could not wait any longer,” said Bobodi.
Bobodi explained that this additional 4MVA temporary increase will cater for the current two major developments in the town, as well as the bulk Nandoni water supply which is due next year. “Agreements to this effect had been signed and as soon as the capacity amendments are done, the said developers will be notified to reapply. All other developments will regrettably wait until December 2019,” said Bobodi.
The 4 MVA increase will cost in the region of R16 million. “We have R10m from the Department of Energy and will top up R6 million from own funds. We are yet to receive the budget quote and payment will be made to Eskom with the funds available. We will in a month or two make the payments to Eskom for the full 22MVA,” said Bobodi.
Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.