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SCA upholds Eskom appeal over municipality’s R41-million debt

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Staff Reporter

The Supreme Court of Appeal (SCA) has upheld, with costs, an appeal against the decision of the Free State High Court in which Letsemeng Local Municipality was granted an interdict to prevent the interruption of the supply of electricity by Eskom.

As at January 31, 2020, the municipality’s debt to the national power supplier had accumulated to an astronomical figure exceeding R41 million.

Based on Letsemeng’s recurrent failure to comply with its obligations, Eskom issued a final notice to interrupt electricity supply with effect from February 18, 2020, which would have affected Koffiefontein, Jacobsdal and Petrusburg, among other towns within the council’s administrative area.

This prompted the municipality to launch an urgent application in the High Court seeking to interdict Eskom from implementing the interruption pending the review of that decision and the determination of a dispute between the parties to be referred to the National Energy Regulator of South Africa.

Eskom filed a counter-application in which it sought, inter alia, to compel Letsemeng to comply with its obligations in terms of the electricity supply agreement (ESA) that it had concluded with Letsemeng.

The High Court granted Letsemeng the interim interdict but dismissed Eskom’s counter-application.

Eskom then approached the SCA seeking a determination on whether the power company was entitled to the relief sought in its counter-application.

In the counter-application, Eskom sought several prayers, including to compel Letsemeng to comply with the payment conditions set out in the ESA.

It also wanted the municipality directed to pay the amount of R5 million which National Treasury had made available for payment to the power utility.

The SCA, in a majority judgment handed down on Thursday, held that Eskom was not entitled to an order declaring that Letsemeng was in breach of section 153(a) of the Constitution because it had not made out a case for that relief.

It further held that Eskom sought vaguely drafted structural orders that would require affidavits being filed with the High Court regularly with no explanation why these orders were necessary and the purpose they intended to serve.

With regard to prayers to compel Eskom to comply with the payment conditions set out in the ESA, the SCA held that these were aimed at securing payment from Letsemeng on the basis of its contractual and statutory obligations.

Letsemeng did not honour any of the AODs and the various payment arrangements it made with Eskom.

Furthermore, Letsemeng undertook to pay the amount of its equitable share earmarked for electricity.

A total of R5 million had been advanced to it by Treasury solely to pay Eskom but it reneged.

In the context of Letsemeng having applied to interdict Eskom from interrupting the supply of electricity, Eskom had no suitable alternative remedy other than its counter-application for the mandatory orders to enforce Letsemeng’s reciprocal obligations to pay for the electricity it received.

Letsemeng’s defence that it should not be ordered to pay what it agreed to pay because it was unable, due to its financial weakness, was no defence.

The SCA held that, to the extent that this may amount to the tacit raising of a defence of impossibility of performance, the position is clear: if a person promises to do something that can be done, such as delivering a thing or paying a debt, but which that person cannot do due to circumstances peculiar to themselves, they are nonetheless liable on the contract.

It said the commercial mayhem that would result, if the rule was otherwise, is not difficult to imagine.

Contractual obligations are enforced by courts irrespective of whether a defaulting party is able to pay or not.

The focus is on the rights of the innocent party, not the means of the defaulting party.

The SCA held that the High Court erred in dismissing Eskom’s counter-application in its entirety.

Accordingly, the appeal was upheld and the order of the High Court dismissing Eskom’s counter-application was set aside and replaced with an order in terms of which Letsemeng was directed to pay Eskom:

  • all amounts, in respect of the electricity it received from Eskom, when such amounts are due and payable as set out in the ESA and Section 65(2) of the Local Government: Municipal Finance Management Act 56 of 2003;
  • all arrear debts due and payable to Eskom, in accordance with the terms of the AOD;
  • such portion of the equitable share that relates to electricity within 24 hours of receipt of the share;
  • the amount of R5 million which the National Treasury made available to the municipality for payment to Eskom;
  • costs, including the costs of two counsel.

Judge Clive Michael Plasket, in a separate concurring judgment, held that the relief granted related to admitted liabilities on the part of Letsemeng which it had not suggested that it was not liable to pay.

The repayment plan figures were prepared by Letsemeng taking into account its own affordability and revenue collected from the sale of electricity to customers.

Therefore, Letsemeng “warranted” that it could afford to pay the amounts it had agreed to pay.

Accordingly, there was no dispute between Eskom and Letsemeng about its liability to Eskom and how it would pay its debt which required resolution by negotiation.

In a dissenting judgment, Judge Ashton Schippers held there was a dispute between the parties concerning the manner in which Letsemeng could be enabled to settle its indebtedness to Eskom.

He said both parties were obliged to make every reasonable effort to resolve the dispute in accordance with the procedures provided for in the Constitution.

Schippers further held that there was a practical difficulty in implementing the orders granted in that Letsemeng, like most municipalities, was in financial crisis.

He said Eskom was aware that Letsemeng did not have the means to settle its outstanding electricity debt of some R41 million.

It was therefore unrealistic of Eskom to expect Letsemeng to comply with its obligations under the AODs and the ESA.

Thus, according to Schippers, the High Court was correct in its observation that the granting of the wide-ranging orders sought in the counter-application would not assist Eskom, if Letsemeng could not pay.

Consequently, he said, the orders sought by Eskom in the counter-application, save for an order that Letsemeng be directed to pay the sum of R5 million which Treasury made available for payment, were difficult to implement.

In the event that the dispute was unresolved within four months of the date of the order, Eskom would be entitled to set down the counter-application for its determination.

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Mangaung warns residents to brace for heavy rainfall

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DISRUPTIVE DOWNPOUR LOOMING . . . Mangaung Metropolitan Municipality has warned heavy rainfall is expected to pound the capital

The Mangaung Metropolitan Municipality has warned residents in and around the Free State capital to brace for heavy rainfall that could cause flooding this Friday.

The municipality is urging drivers to take extra caution by reducing speed and switching their headlights on, while pedestrians are being reminded to be careful when crossing the road and to avoid crossing rivers and streams where water is above the ankles.

“Residents of Mangaung Metro, particularly in the former Naledi region, are urged to be cautious on the road and in their homes as the South African Weather Service has issued an impact-based warning . . . for possible disruptive rainfall,” the metro said in a statement.

“This warning is valid for Friday, 20 May 2022 until Saturday, 21 May 2022.”

“Heavy rains are also predicted in Bloemfontein on Friday,” it added.

“Localised flooding can be expected in susceptible low-lying areas, roads, formal/informal settlements and bridges.” – Staff Reporter

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Mangaung speaker vows not to be silenced by charges

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DEFIANT . . . Mangaung council speaker Stefani Lockman-Naidoo

Mangaung council speaker Stefani Lockman-Naidoo has vowed not to stop fighting corruption in the metro after she was summoned to a disciplinary hearing set for next month for disobeying her party, the ANC, resulting in the axing and suspension of senior officials in the municipality.

The ANC Mangaung Interim Regional Committee (IRC) has summoned her to a disciplinary hearing on June 7 to answer to charges of knowingly and intentionally defying a resolution of the ANC Caucus in council after she allowed a motion to be debated without referring it to party structures in the council.

Lockman-Naidoo’s tiff with her party dates back to January when the Mangaung IRC announced her suspension after she was accused of defying the ANC’s instruction no to proceed with a sitting which resulted in then acting city manager Sello More being removed from office.

The Mangaung speaker also told The Free Stater on Thursday that she was being targeted for presiding over a recent council sitting that resolved to suspend several allegedly corrupt officials in the municipality.

“We are being charged for suspending a corrupt HOD (head of department),” said Lockman-Naidoo, referring to David Nkaiseng who heads corporate services.

A council meeting held on May 12 – after receiving an investigation report from Matlho Attorneys – resolved, among others, to bring charges against Nkaiseng for his alleged role in unlawfully appointing the officials resulting in the flouting of municipal policy of appointment of officials as well as flouting municipal staff regulations and the code of conduct for municipal officials.

“We are being targeted because we are purging these corrupt officials of Mangaung,” charged Lockman-Naidoo.

“I will not tolerate any corruption . . . Wherever I go I will be known as that speaker that didn’t tolerate corruption,” she added confidently.

The speaker was however quick to point out that those charging her had no authority to do so.

“But you see, the charges are not from the ANC because they didn’t ask for permission from the provincial coordinator (Paseka Nompondo) to charge us,” she said.

“The region itself is an illegitimate structure. Its term has expired and these are just factions . . .

“It’s a faction of the region that is charging us – it’s not the ANC.

“They are the ones that are purging us because we are not part of their faction.

“This is what’s going on. They don’t tolerate me.”

Lockman-Naidoo claimed the faction was not happy with the suspension of the HOD.

“The council resolution . . . says several criminal charges must be opened against the HOD himself and relevant officials,” she said.

“And I’m wrong for suspending a person like that?

“I don’t mind being charged at all because we did the right thing as council.

“They are saying . . . they are charging us because I allowed the item to sit in council.

“It’s not my item – it’s a council item. I couldn’t remove it. There was nothing I could do.”

Council also resolved that Nzimeni Maswabi be charged by acting city manager for his role in approving unlawful staff appointments.

It also wants Thabang Joseph Mpeli to be charged for his role in the drafting of unlawful appointment letters.

However, ANC Mangaung IRC spokesperson Ncamisa Ngxangisa has dismissed Lockman-Naidoo’s claims saying the party was not targeting anyone but it simply wanted to put its house in order.

In a separate interview, Ngxangisa said there were concerns some councillors could be working with the opposition, hence the probe.

“We are not targeting individuals. We are dealing with members of the ANC who happen to be councillors in this regard,” he told The Free Stater.

“This is after we received concerns that there could be some members who are voting with the opposition, against the position of the caucus of the ANC in that municipality.

“We took everything as it is, and referred the matter to our sub-committee that deals with issues of discipline so that they inquire into all these allegations levelled against all these comrades.

“But at the same time, it gives these comrades an opportunity to respond or query any evidence that may be presented against them.”

Ngxangisa said every organisation implements disciplinary processes when something goes wrong and the ANC was only exercising its right to do so.

“We are a political party, we contest elections,” he said.

“We are relying on our councillors to make sure that our policy position and decisions find expression in that council.

“If there are allegations that such is not happening, any self-loving political party will stand up and do something about it.

“These accusations are neither here nor there – no one is targeted.

“There are concerns that the centre is not holding in that municipality.

“Our caucus through the chief whip is not given enough support by our councillors and there are such allegations.

“That’s a cause for serious concern which must be attended to so that the ANC can at least enjoy its majority in that municipality.”

The Mangaung IRC spokesperson emphasised that the ANC was firmly against any corrupt activities but indicated that councillors were expected to represent the interests of the party and not their own.

“When we say all councillors must toe this line, we expect everyone to toe that line. Anyone who goes astray is a concern to us,” he said.  – Staff Reporter

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Centlec warns cable theft masterminds

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STOLEN . . . Part of the copper cable recovered by the police

Power distribution company Centlec has issued a stern warning to people believed to be hired by unknown individuals or syndicates to steal copper cables from the power lines saying it will not allow them to destroy such key infrastructure and put the country’s economy at risk.

“This is war and we will fight it tooth and nail,” said Centlec in a statement.

“We want to send a strong message to the criminals and their handlers that we will not rest until they are behind bars,” added the company, which distributes electricity to Mangaung and surrounding municipalities.

It said it is aware that most of the criminals are just fronts who are sent by kingpins who then process the copper before selling it.

Centlec warned the kingpins that they would soon face the full might of the law.

“Some of the fronts happen to be vulnerable foreign nationals who are being used to steal our cables by their handlers,” said the company.

A joint operation by Centlec and the police in recent weeks has led to several arrests and the recovery of hundreds of kilogrammes of copper cable destined for scrapyards.

In the latest three incidents, a man was arrested in Botshabelo after being found in possession of copper cable believed to have been stolen.

Several people were also arrested following inspections at two scrapyards in Botshabelo where large amounts of copper were found.

At a scrapyard in Bloemfontein, a man was issued with a fine after he was found with copper weighing 150kg which he failed to account for.

Investigations are still underway to ascertain the real owner of the scrapyard for possible arrest.

“We are worried that many of these scrapyards are becoming a haven for criminals and promoting criminality,” said Centlec chief executive officer Malefane Sekoboto. – Staff Reporter

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