Electricity battle hots up

A BATTLE between the Ekurhuleni metro and mining giant DRDGold over a disputed R126m electricity.Picture: Gallo Images

A BATTLE between the Ekurhuleni metro and mining giant DRDGold over a disputed R126m electricity bill is hotting up. DRDGold says it receives electricity directly from Eskom so should not be liable for surcharges charged by Ekurhuleni.

The mining group says the metro has threatened to cut power if the money is not paid by DRDGold subsidiary, Ergo Mining, which operates within the Ekurhuleni metro.

“The municipality is demanding we pay the money to ensure continued electricity supply to Ergo. This will drastically reduce DRDGold’s cash balance of R295m as at end December,” James Duncan, company spokesperson, said.

Duncan said Ergo has been engaged in a legal dispute with the municipality since December 2014 regarding the payment of surcharges on the supply of electricity.

“Ergo’s argument is that it is supplied electricity directly by Eskom and therefore is liable only to pay the Eskom rates and not municipal surcharges. In May 2016, the metro threatened to cut off Ergo’s electricity supply unless Ergo paid its ‘arrears’.

Ergo was granted an interdict by the High Court preventing the municipality from enforcing payment, pending the court’s ruling on the main dispute between Ergo and Ekurhuleni metro,” he said. The company has lodged R126m with an attorney’s trust account pending the resolution of the dispute. DRDGold went as far as the Constitutional Court for relief, but that court said that the issue “did not engage the jurisdiction” of the ConCourt. The dispute between the two parties is scheduled to be heard in the High Court on December 5.

“If we are successful with this, Ergo will seek to recover the amount of R126m, all surcharge payments made between now and the High court ruling, and a further amount of around R42m in overpayments made to the municipality prior to December 2015,” Duncan said.

The company said this ruling will not affect the company’s approach to the payment of dividends, since the funds were held in a trust account and was dealt with by the company in its accounts as “restricted cash”. The Chamber of Mines said it was not aware of the issue and would not get involved in operational issues of a company and its service provider.

Eskom spokesperson Khulu Phasiwe said he was not aware of the dispute.“What I know for sure, since mines use substantial amounts of electricity, is that all mines are supplied by Eskom, and the majority pay Eskom directly, not a municipality,” he said.

The Ekurhuleni metro municipality did not responded to an email query send to them regarding this matter.

-BERNARD SATHEKGE|bernards@thenewage.co.za