Role players in the agriculture sector are keeping a watchful eye on the 139 Free State farms that Eskom is seizing from a municipality that owes the power utility billions.
A court order signed by the Free State high court will see state-owned enterprise Eskom seize the farms – valued at R2.5 billion – under the ownership of the Matjabeng local municipality.
The instruction comes after the defaulting municipality failed to adhere to its payment obligation for the bulk supply of electricity.
In a media statement the power utility says that it had been involved in numerous court processes with the serial defaulter since 2014 when the municipality’s debt totalled R372 million.
In its six-year debt recovery efforts, Eskom has only received five payments from the municipality amounting to R66.5 million, against a total bill of R1.3 billion for the period. The debt has since escalated to a whopping R3.4 billion.
The power utility says that municipalities have a responsibility to fulfil their financial obligations for the bulk supply of electricity. “The title deed will be signed over to Eskom while Matjhabeng remains in arrears,” it says in a media release.
According to Dr Jack Armour, Free State Agriculture’s operations manager, it is not yet clear what the power utility intends to do with the seized lands should the debt not be serviced.
“A lot of the land might have been old mine lands that were given back to the municipality. Ceding this land to Eskom is risky. The fact of the matter is there might have been people working those lands. What happens if the municipality goes bankrupt and Eskom takes ownership of that land?”
Eskom is not in the business of farming, Armour argues. This could also be a potential hinderance in the efforts of land reform.
“In a country where people are desperate for land reform it is worrying that the needs of others were set aside to pay for the mistakes of a state-owned entity,” Armour says.
Although he emphasises that, at this stage, everything is pure speculation, Armour believes that the situation could have positive effects. “Eskom could put up solar panels or use the land for alternative power generation. It could use the farms even more effectively and create jobs generating more income for those communities.”
At the end of July, the total outstanding debt to Eskom from municipalities stood at R31 billion and now threatens the sustainability of Eskom.