(Bloomberg) -- Johannesburg, South Africa’s economic hub, criticized Eskom Holdings SOC Ltd. for threatening to disrupt power supply to the city for unpaid bills and said it would take legal action to stop it.
The state-owned power utility informed the City of Johannesburg and City Power, the municipality’s distribution company, of its intentions on Thursday because of 4.9 billion rand ($280 million) in outstanding debt.
“The city strongly condemns this move as unjust, counterproductive, and potentially harmful to the residents and businesses of Johannesburg,” it said in a statement. The city stopped paying the power utility because of a dispute over billing charges, it said.
The city “urges Eskom to retract its public notice and engage in genuine, good-faith negotiations to resolve these matters constructively,” it said.
Eskom said it had resorted to the measure as the nonpayment was putting it under further financial strain. The utility, which received a 250 billion rand bailout from the government, last month applied to the energy regulator for a 36% increase in prices because of 85 billion rand in unpaid bills by municipalities, including Johannesburg.
“When entities like the CoJ fail to pay Eskom timeously or at all, it forces Eskom to borrow additional money at premiums to fund operational costs,” it said in the statement Thursday. “Eskom’s financial sustainability and ability to supply electricity at affordable prices is contingent upon its ability to improve its balance sheet by increasing revenue and reducing expenses.”
Eskom said it would make a final decision on whether to interrupt power supply on Dec. 12, after hearing from affected parties.
Renewal of outages in Johannesburg after more than seven months without blackouts, thanks to Eskom improving the performance of its power stations, would further irk residents already frustrated with the city’s poor service delivery.
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