The Maluti a Phofung Local Municipality has struck a deal with Eskom to pay R8-million per month towards clearing a R427-million outstanding debt with the electricity generator.

Executive mayor Vusi Tshabalala said over and above the installments towards arrears, the municipality, which has in the past struggled to keep up with payments, would also maintain payments for its regular monthly consumption to avoid falling further into debt.

An improved electricity supply management and revenue collection system that has seen a new department of electricity established and R16-million collected from consumers in six weeks will enable the municipality to raise enough cash to keep up with payments to Eskom, he added.

An undertaking by Eskom to suspend penalties on arrears as long as installments are maintained will also help lighten the financial burden on the municipality that apart from ensuring electricity supplies must also keep others services running.

“After long negotiations with Eskom we agreed that an amount of R8-million be paid monthly in a bid to clear our R427-million debt,” Tshabalala said.

“We will manage to pay this amount because there will be no penalties on arrears, while we will also continue paying for current consumption.”

According to Tshabalala, the payment arrangement between his council and Eskom has the blessings of the provincial department of treasury which met last week to formally endorse the deal.

The payment deal becomes effective beginning the end of September.

Maluti a Phofung has faced power supply problems for years, with frequent blackouts, a situation that has not only been an inconvenience to ordinary consumers but also a put-off to potential investors.

According to council speaker Malewatle Nthedi, the local authority was forced to adopt the aggressive plan to clear its debt with Eskom, while also taking measures to ensure better collection of revenue from consumers, after the power utility threatened to switch it off for good over the outstanding debt.

“Eskom had threatened to switch us off if we did not come up with an acceptable plan to pay the R427-million we owed them,” Nthedi said.

The recently established department of electricity that is headed by member of the mayoral committee responsible for infrastructure development, Aziel Nhlapo, is working on a turnaround strategy that should see electricity supplies stabilised across the municipality over the next three months.