BUSINESS NEWS - Eskom recently attached 139 farms worth R2.5 billion from Matjhabeng municipality in the Free State, signalling a new front in the war with delinquent municipalities.
The electricity utility has been known to attach cars, computers and bank accounts in settlement of municipal arrears, but attaching farms as security for debts owed is something new.
As of 31 July, municipalities owed Eskom R31 billion, with 80% of this owed by just 20 municipalities.
Asked what prompted the attachment of these farms, Eskom replied: “To collect this debt, Eskom is implementing the contractual conditions as per the supply agreement such as interrupting supply, pursuing legal avenues consistent with good credit management processes.
“So far, these 139 farms are the only property of this nature that Eskom is holding as security to cover unpaid debt.”
Farms valued at an average of R18m each
The farms were attached as security for Matjhabeng municipality’s R3.4 billion debt. The municipality values the farms at R2.5 billion, or R18 million each on average (bear in mind this is gold mining country, and includes the town of Welkom).
That should raise eyebrows for all sorts of reasons, and it has.
If just one bombed-out municipality has 139 farms it can hand over as security for a debt, how many such municipal farms are there scattered across the country?
That’s a question Leon Louw, executive director of the Free Market Foundation, wants answered: “What on earth is a municipality doing with 139 farms to give Eskom for debt security?
“That [Matjhabeng] has farms at all, let alone 139 farms, should generate a political and media outrage, yet the scandal went unnoticed.”
Expropriation without compensation pressures
Louw’s outrage is directed at the pressure to implement expropriation without compensation (EWC) on the pretext that the willing buyer/willing seller model has failed and more radical land redistribution is needed.
“It appears that municipalities are sitting on vast tracts of superfluous land.
“If the Matjhabeng municipality’s 139 farms are indicative of the rest of the country, the government has ample land for redistribution.”
Fovernment is about to auction off almost 900 vacant or underutilised state-owned farms across the country, a move aimed at helping those discriminated against during apartheid.
It begins to appear as if there is far more state-owned land available for redistribution than has hitherto been admitted.
Eskom says the Matjhabeng farms remain the property of the municipality until the dispute has been resolved in an outstanding court case.
Eskom – like municipalities – is under huge pressure to gather every cent owed to it and rein in ballooning arrears bills.
It explains the motivation for the land attachments: “Over the years Eskom has done everything within the company’s legal constraints to recoup unpaid debts from municipalities.
In addition to pursuing the legal route with individual municipalities, such as the recent action against the Matjhabeng and Maluti-a-Phofung municipalities, Eskom is actively engaging stakeholders such as the National Treasury, SA Local Government Association and the Department of Cooperative Governance and Traditional Affairs (CoGTA) to improve the payments by municipalities.