When the business community in Cradock, in the Eastern Cape, could no longer tolerate the constant power outages that crippled the town’s economy they collected money to institute court action against the municipality.
“We managed to raise about R160 000,” says Charles Featherstonehaugh, who headed the Cradock Business Forum, one of the litigants.
The forum, together with the Cradock and the Middelburg ratepayers’ associations, took power supplier Eskom, the National Energy Regulator, the Inxuba Yethemba municipality and other state departments to court in a bid to force them to sort out a long-standing debt.
The Makhanda division of the Eastern Cape high court (formerly Grahamstown) ordered the Inxuba Yethemba municipality to pay Eskom R127-million. As a result of the debt, the power utility was only allowing a limited supply of electricity to the municipality.
In a judgment in June last year, the court ordered that “the municipality shall keep separate financial statements, including a balance sheet of its electricity reticulation business, as is envisaged in section 27(i) of the Electricity Regulation Act, 2006 (Act 4 of 2006)”.
It also ordered that the Inxuba Yethemba municipality’s “financial statements disclose, on a monthly basis, revenue received in respect of the supply of electricity and the extent to which such revenue is appropriated for the payment of its current account with Eskom and its obligation … to effect payment for arrears”.
The municipality has to report to the court on or before the 15th day of every third month to implement the court’s ruling.
But in March this year, the applicants were back in court to ask it to compel the Inxuba Yethemba municipality to “produce copies of the accounts of Eskom, in respect of the purchase of bulk supplies of electricity for the towns of Cradock and Middelburg, for the months of July, August, September, October and November 2020”.
They also wanted the municipality to produce proof of payments made to Eskom and disclose why they had not kept their part of the bargain regarding paying the debt.
Despite the court action, says Featherstonehaugh, nothing has changed in the town renowned for being the home of one of the leading civic organisations fighting against apartheid in the 1980s, the Cradock Civic Association.
Its leaders, Matthew Goniwe, Fort Calata, Sparrow Mkhonto and Sicelo Mhlawuli, were abducted and killed by an apartheid death squad in 1985.
But Featherstonehaugh says even the Cradock Four Memorial in Lingelihle township has been vandalised and raw sewage “runs 20 centimetres high in the local cemetery”.
A decade ago, Featherstonehaugh bought a house in the town for R2-million, which he turned into a B&B.
He pays R2 000 in rates monthly and an additional R1 000 in weekly wages for his gardener.
“There is no maintenance in the town. The roads are bad, they don’t clean the streets, so I have to pay someone R1 000 every week so they can do the work that the municipality should do,” he says.
The continuing power outages have crippled business in the town and chased investors away. Featherstonehaugh says sometimes the town goes up to four days without electricity.
As a result, at his own cost, he has had to install a solar power panel to power his geyser and special rechargeable bulbs to keep the lights on during outages. Restaurants spend a fortune on fuel for generators to keep their businesses going.
With the local government on its knees and failing to meet its constitutional obligations to the public, more organisations are turning to the courts for help.
In one of the latest cases that may have far-reaching implications, poultry producer Astral Foods obtained a high court order against the government and the treasury over the non-delivery of basic water and electricity to the Lekwa municipality in Mpumalanga.
The court ordered the government and the treasury to prepare a financial recovery plan for the ailing municipality in line with the Municipal Finance Management Act.
Lekwa, which includes the town of Standerton, has virtually collapsed. It is plagued by constant power outages resulting from a rotational system. It owes Eskom R1.3-billion.
Besides the power problems, residents complain of blocked sewage pipes that have not been fixed or maintained for years. The Lekwa Ratepayers Association is also in the process of taking legal action against the beleaguered municipality over its failure to provide services.
“The municipality cannot hold the community to ransom for their wrongdoings. They must stand up and be counted. That’s the bottom line and politically the opposition should hold them accountable for it and that is their job,” said Lekwa resident Joanie Greef in a WhatsApp group chat.
“Honest paying and electricity buying residents cannot be held ransom by the failure of the municipality to pay Eskom. NMD [notified maximum demand] is not lifted because the municipality failed to pay Eskom and Eskom allowed the municipality to owe so much by not enforcing its debt collection system while it was still too early. Therefore residents must fight for what is rightfully theirs, an unhindered and continuous supply of electricity without any Lekwa shedding,” said Greef.
The Astral case, brought in April, is the latest in a series of litigation against the government and its entities to intervene in the failure by municipalities to provide proper services.
In June, the South African Local Government Authority (Salga) said in response to yet another report by the auditor general, which paints a troubling picture of the financial affairs in municipalities, that “one of the biggest challenges that has confronted local government over the past 20 years is that of municipal consumer debt.”
The authority argued that the “AG’s 2019/20 report continues to contextualise this problem and demonstrates how it affects municipal governments’ budgets, ability to render services and accounting processes. To illustrate the prevalence and pervasiveness of this across the country, on average almost 63% of the revenue shown in the books will never find its way into the bank accounts of the municipality.”
Salga further noted that “hence 49% of municipalities have outstanding creditors that are greater than available cash at year-end”.
The failures at the local government level are further acknowledged in a 2021-22 annual performance plan report by the department of co-operative governance and traditional affairs.
The department noted that 36 municipalities were placed under intervention in terms of section 139 of the constitution during the 2019-20 financial year.
It cited contributing factors to the poor state of municipalities, such as “political in-fighting to political mismanagement”.
According to the department’s annual performance plan report, “the most glaring difficulty experienced by most municipalities is financial nonviability. Often, this has been due to lack of adequate systems and capacity to effectively manage the financial situation at the municipality.
“Aggregate municipal consumer debts amounted to R191.5-billion as of 30 June 2020, of which metropolitan municipalities are owed R102.3-billion and secondary cities R35.8-billion. Municipalities owed their creditors R60-billion,” the department notes in the report.
The failure by municipalities to govern and the success of litigation against them could open the way for lawyers to cash in through such cases, as has happened with medical neglect and Road Accident Fund litigation.
The spiralling of medical negligence cases, in which the state lost hundreds of millions in legal fees, drew the ire of the then minister of health, Aaron Motsoaledi.
But it appears lawyers have already caught up on what may become a lucrative business — litigation against local government. One reputable law firm posted on its website: “The litigation instituted against the municipalities is setting a precedent, wherein ratepayers can hold their respective municipalities accountable to their constitutional obligations.”
It went on to say that “as a result of its [the law firm’s] experience and expertise, is well suited to assist clients in ensuring that municipalities and counsellors (sic) adhere to their constitutional mandate. Therefore, please do not hesitate to contact us for assistance.”
But despite winning their cases against the Inxuba Yethemba municipality in court, it appears the Cradock residents may still have a lengthy battle on their hands.“We feel helpless,” says Featherstonehaugh regarding the municipality’s failure to adhere to court orders. “It’s like speaking to a stone wall. Nothing has changed. In actual fact, it has gone backwards.”
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