THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 870/2020
In the matter between:
ESKOM HOLDINGS SOC LIMITED                                                        APPELLANT
and
LEKWA RATEPAYERS ASSOCIATION NPC                         FIRST RESPONDENT
LEKWA LOCAL MUNICIPALITY                                        SECOND RESPONDENT
NATIONAL ENERGY REGULATOR OF SOUTH AFRICA     THIRD RESPONDENT
MINISTER OF ENERGY                                                      FOURTH RESPONDENT
PREMIER OF MPUMALANGA                                                 FIFTH RESPONDENT
MEMBER OF THE EXECUTIVE COUNCIL FOR
COOPERATIVE GOVERNANCE AND TRADITIONAL
AFFAIRS, MPUMALANGA                                                      SIXTH RESPONDENT

In the matter between:
ESKOM HOLDINGS SOC LIMITED                                                        APPELLANT
and
VAAL RIVER DEVELOPMENT ASSOCIATION (PTY) LTD    FIRST RESPONDENT
NGWATHE LOCAL MUNICIPALITY                                   SECOND RESPONDENT
NATIONAL ENERGY REGULATOR OF SOUTH AFRICA     THIRD RESPONDENT
MINISTER OF ENERGY                                                      FOURTH RESPONDENT
PREMIER OF FREE STATE                                                     FIFTH RESPONDENT
MEMBER OF THE EXECUTIVE COUNCIL FOR
COOPERATIVE GOVERNANCE AND TRADITIONAL
AFFAIRS, FREE STATE                                                          SIXTH RESPONDENT

Neutral citation: Eskom Holdings Soc Ltd v Lekwa Ratepayers Association and
Others; Eskom Holdings Soc Ltd v Vaal River Development
Association (Pty) Ltd and Others (870/20) [2022] ZASCA 10 (21
January 2022)
Coram:
Dambuza, Van der Merwe and Gorven JJA and Meyer and Kgoele AJJA
Heard:
23 November 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives via e-mail, publication on the Supreme
Court of Appeal website and released to SAFLII.  The date and time for
hand-down is deemed to be 10h00 on 21 January 2022.

Summary:
Constitutional Law and Administrative Law – Cooperative governance –
Section 41 of the Constitution and section 40 of the Intergovernmental Relations
Framework Act 13 of 2005 require Organs of State to make reasonable effort in good
faith to settle intergovernmental disputes.
Interdict – Interim interdict – Appealable - although it is generally considered not in the
interests of justice to permit an appeal against an interim interdict, there are limited
circumstances where the interests of justice dictate that an interim interdict be
appealable.
Interdict – Interim interdict - Prima facie right - whether residents of two municipalities
have established the requisite prima facie right at the level required for interim relief to
restrain Eskom from implementing its unilateral decisions to reduce its bulk electricity
supply to municipalities to historic, outdated and inadequate contractually agreed
supply levels without prior compliance with the constitutional and statutory imperatives
relating to intergovernmental dispute resolution mechanisms, which rendered
municipalities unable to fulfil their constitutional obligations owed to their citizenry
resulting in a catastrophe unfolding with hospitals, schools, households and
businesses severely disrupted and with damage to the environment as a result of
water sources being contaminated due to damage to the municipal water and sewage
systems.
Prima facie right on the facts established by demonstrating prospects of success in
review proceedings in due course to review and set aside Eskom’s decisions on the
basis that they undermine constitutional and statutory imperatives.

___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from: High Court, Gauteng Division, Pretoria (Millar AJ sitting as court of
first instance):

1. The appeal in Eskom Holdings Soc Ltd v Lekwa Ratepayers Association and Others
(High Court case no. 35054/2020) is dismissed with costs, including those of two
counsel.
2. The appeal in Eskom Holdings Soc Ltd v Vaal River Development Association and
Others (High Court case no. 31813/2020) is dismissed with costs, including those of
two counsel.

___________________________________________________________________

JUDGMENT
___________________________________________________________________
Meyer AJA (Dambuza, Van der Merwe and Gorven JJA and Kgoele AJA
concurring):

[1] This appeal arises from two applications brought in the Gauteng Division of the
High Court, Pretoria: One under case number 31813/20 by the Vaal River
Development Association (Pty) Ltd against Eskom Holdings SOC Limited (Eskom),
Ngwathe Local Municipality (Ngwathe municipality), the National Energy Regulator of
South Africa (NERSA), the Minister of Energy (the Minister), the Premier of the Free
State province and the Member of the Executive Council for Cooperative Governance
and Traditional Affairs for the Free State province (the Ngwathe application). The other
under case number 35054/20 by the Lekwa Ratepayers Association NPC against
Eskom, the Lekwa Local Municipality (Lekwa municipality), the Minister, the Premier
of the Mpumalanga province and the Member of the Executive Council for Cooperative
Governance and Traditional Affairs for the Mpumalanga province (the Lekwa
application). The Ngwathe application concerns a reduction of Eskom’s bulk electricity
supply to Parys and Vredefort, and the Lekwa application a reduction of its bulk
electricity supply to the towns Standerton, Sakhile, Meyerville, and surrounds.

[2] Eskom took decisions to reduce its bulk electricity supply to the Ngwathe and
Lekwa municipalities to historic, outdated and inadequate contractually agreed
‘Notified Maximum Demand’ supply levels (NMD supply levels) as a result of those
municipalities’ failure to honour their payment obligations to Eskom over prolonged
periods of time and the inability of Eskom and those municipalities to reach
agreements on the terms of Eskom agreeing to increase the NMD supply levels to
meet those municipalities’ present additional demand requirements, despite the
residents represented by the Vaal River Development Association (Pty) Ltd (the
Ngwathe residents) and those represented by the Lekwa Ratepayers Association NPC
(the Lekwa residents) being paying consumers on pre-paid electricity. An NMD supply
level is the ‘maximum demand notified in writing’ by the consumer (municipality
concerned) and accepted by the licensee (Eskom) as the maximum demand bulk
electricity which the particular municipality requires Eskom to be able to supply on
demand.

[3] In the Ngwathe and Lekwa applications, the residents, through their
associations, sought interim interdicts against Eskom to inter alia restore the bulk
supply of electricity to the Ngwathe and Lekwa municipalities to those levels supplied
before the implementation of the decisions to reduce the bulk supply to within the
contractually agreed NMD supply levels, pending applications to review and set aside
those decisions of Eskom, either in terms of the Promotion of Administrative Justice
Act 3 of 2000 (PAJA) or legality reviews. Each application was opposed only by
Eskom. Although the two applications were not formally consolidated, they were heard
together.

[4] On 28 August 2020, the High Court (Millar AJ) granted an order that, pending
the finalisation of the Ngwathe application and the final adjudication of the Ngwathe
residents’ review application, which was to be instituted on or before 30 October 2020,
Eskom ‘is to increase, alternatively restore the maximum electricity load supply to
Parys and Vredefort to the level supplied prior to Eskom’s recent implementation of
the current limited 95% of 21 MVA to Parys and 4.3 MVA to Vredefort; thus interdicting
and prohibiting Eskom from implementing its decision to limit electricity supply to
Ngwathe per Parys and Vredefort to the Notified Maximum Demand (“NMD”) of 95%
of 21 MVA in Parys and 4.3 MVA in Vredefort pending an agreement acceptable to

Eskom on the settlement of arrears owed by [the Ngwathe municipality] (“the
decision”)’. Eskom and the Ngwathe municipality were further ‘jointly and severally
ordered to, within 5 days of the order, alternatively a time period set by the Court,
restore the bulk electricity supply equipment to enable both transformers at Parys to
be available and to render sufficient capacity at Parys, alternatively to install
infrastructure to permit and allow electricity supply to Parys to the levels experienced
prior to recent limitation associated with the NMD of 21 MVA for Parys following upon
implementation of the decision’. Eskom was also ‘directed to provide and assist the
[Ngwathe municipality] to enable ringfeed of supply to Parys, to serve as back-up and
to serve as a source in cases of emergency ensuring that adequate alternative
capacity is available at the aforesaid towns’.

[5] In the Lekwa application, the High Court granted an order that, pending the
finalisation of the Lekwa application and the final adjudication of the Lekwa residents’
review application, which was also to be instituted on or before 30 October 2020,
Eskom ‘is to increase, alternatively restore the maximum electricity load supply to
Lekwa Local Municipality (“Lekwa”) per the towns of Standerton, Sakhile, Meyerville
and surrounds to the level supplied prior to Eskom’s recent implementation of the
current limited 55 MVA, being at least 67 MVA; thus interdicting and prohibiting Eskom
from continuing with implementing its decision to limit electricity supply to Lekwa to the
Notified Maximum Demand (“NMD”) of 55 MVA (“the decision”)’. The Lekwa
municipality was also interdicted ‘from implementing rotational load shedding
premised on a limitation linked to NMD of 55 MVA to Standerton, Sakhile, Meyerville
and surrounds’. The appeal, with leave of the High Court, is against the orders made
in both applications.

[6] Eskom and the Ngwathe and Lekwa residents are all ad idem that the present
matter is one of those exceptional cases where the interests of justice demand that
the interim interdicts granted by the High Court should be appealable. I agree. This
appeal raises an issue of special public importance. It is whether the residents have
established the requisite prima facie right at the level required for interim relief to
restrain Eskom from implementing its unilateral decisions to reduce its bulk electricity
supply to municipalities to historic, outdated and inadequate contractually agreed NMD
supply levels as a result of municipalities’ failure to honour their payment obligations

to Eskom over prolonged periods of time and the inability of Eskom and those
municipalities to reach agreements on the terms of Eskom agreeing to increase the
NMD supply levels to meet those municipalities’ present additional demand
requirements, pending the finalisation of review applications to set aside such
decisions under PAJA or the principle of legality. Electricity is one of the most common
and important basic municipal services and has become virtually indispensable,
particularly in urban society. Citizens have a right to receive basic services, and this
includes electricity.1

[7] As I said in Old Mutual Limited and Others v Moyo and Another,2 after a review
of the authoritative judgments on this question:
‘Although it is generally considered not in the interests of justice to permit an appeal against
an interim interdict since it will defeat the interim nature of the order and undermine ‘a
necessarily imperfect procedure, which is nevertheless usually best designed to achieve
justice’, it is now settled that there are limited circumstances where the interests of justice
dictate that an interim interdict be appealable.  (See for example Cipla para 37 [Cipla Agrimed
(Pty) Ltd v Merck Sharp Dohme Corporation and others 2018 (6) SA 440 (SCA)], Department
of Home Affairs and another v Islam and others [2018] ZASCA 48 para 10 and Velocity Trade
Capital (Pty) Ltd v Quicktrade (Pty) Ltd and others [2019] 4 All SA 986 (WCC), para 30 et seq.
Also see the Constitutional Court judgments in cases such as S v S paras 46-47 [S v S and
Another 2019 (6) SA 1 (CC)], Tshwane City v Afriforum and Another 2016 (6) SA 279 (CC)
para 40, Children’s Institute v Presiding Officer, Children’s Court, Krugersdorp, and Others
2013 (2) SA 620 (CC) para 16 and National Treasury and Others v Opposition to Urban Tolling
Alliance and Others 2012 (6) SA 223 (CC) para 25, although it should be borne in mind that
the operative standard for determining whether leave to appeal should be granted by the
Constitutional Court is the interests of justice.)  In deciding what is in the interests of justice,
each case has to be considered in the light of its own facts.  (Member of the Executive Council
for Development and Planning and Local Government, Gauteng v Democratic Party and
others 1998 (4) SA 1157 (CC), para 32.)  In other words, it is a fact-specific enquiry.  (S v S
para 47).’

1 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC);
2010 (4) SA 55 (CC) paras 34 and 40.
2 Old Mutual Limited and Others v Moyo and Another [2020] ZAGPJHC 1; [2020] 4 BLLR 401 (GJ);
[2020] 2 All SA 261 (GJ); (2020) 41 ILJ 1085 (GJ) para 103.

[8] I now turn to the facts relevant to the determination of this appeal; they are
straightforward and essentially uncontentious. The generation, transmission and
distribution of electricity is regulated by the Electricity Regulation Act 4 of 2006 (ERA).
The NERSA is a regulatory authority established in terms of s 3 of the National Energy
Regulator Act 40 of 2004 (NERA). In terms of s 3 of the ERA, it has been designated
as the custodian and enforcer of the regulatory framework of the ERA. As the
regulator, it is empowered, inter alia, in terms of s 4(a)(i)(aa) of the ERA read with its
s 1 definitions, ‘to issue licences for the operation of generation [“the production of
electricity by any means”], transmission [“the conveyance of electricity through a
transmission power system excluding trading”] and distribution facilities [“the
conveyance of electricity through a distribution power system excluding trading”]’.

[9] Eskom, an organ of state, is licensed by NERSA to generate, transmit and
distribute electricity countrywide. Currently, it is the only entity licensed to supply
electricity to municipalities in the country. Municipalities, for their part, are licensed by
NERSA to reticulate electricity supplied to them in bulk by Eskom. They, in turn, supply
and on-sell the electricity to the end-users within their areas of jurisdiction. The
municipalities reticulate the bulk electricity supplied by Eskom to their municipal grids
through their electricity supply networks to the end-users.

[10] The contractual relationship between Eskom on the one hand and
municipalities on the other is, apart from the ERA, also regulated in terms of written
electricity supply agreements concluded between them. The written electricity supply
agreement under which Eskom currently supplies electricity to the Lekwa municipality
was concluded between the Electricity Supply Commission (Escom), established
under the Electricity Act 42 of 1922, and the Standerton municipality on 26 January
1981, which is more than forty years ago. In terms thereof, the parties agreed that the
notified maximum demand of the Standerton municipality at the date of signing that
agreement was 55 MVA. The written electricity supply agreement under which Eskom
supplies electricity to the Ngwathe municipality was concluded between Eskom and
the Ngwathe municipality on 29 September 2008, which is more than thirteen years
ago. In terms thereof, the parties agreed that the notified maximum demand of the
Ngwathe municipality at the date of signing that agreement was 21 MVA for Parys and
4,3 MVA for Vredefort.

[11] The written electricity supply agreements concluded between Eskom and the
two municipalities provide that, should a municipality at any time require any increase
in the NMD supply level in force from time to time, it shall give adequate notice in
writing to Eskom of the additional demand which it requires Eskom to supply and the
date at which the additional demand is required. If Eskom accepts the NMD supply
level in force from time to time, it will be increased by the additional demand required
by the municipality.

[12] Provisions relating to the NMD supply levels form not only part of the electricity
supply agreements contemplated in the ERA, but also the rules and licence conditions
prescribed by NERSA – ‘the Notified Maximum Demand (NMD) and maximum export
capacity (MEC) rules’ (the NERSA rules) – and Eskom’s extensive Notified Maximum
Demand Rules (Eskom’s NMD rules).  Paragraph 2 of the NERSA rules states:
‘According to the agreement the licensee is required to provide the contracted amount of
Notified Maximum Demand capacity, and the customer must never exceed this capacity.
When customers exceed their monthly Notified Maximum Demand . . ., a network excess
charge is imposed for the excess.  This is due to the fact that a customer that exceeds the
Notified Maximum Demand does so without permission.  They use capacity that is not
allocated to their point of delivery, put the network under strain, hamper the ability to do proper
network and capacity planning.  Moreover, they place the network and other customers’
electricity supply and the licence at risk.’

[13] It is common cause that the NMD supply levels in force for the Lekwa and
Ngwathe municipalities are hopelessly outdated. Their actual consumption of and
need for electricity far exceed the agreed NMD supply levels. The Lekwa municipality
requires more than 20% additional bulk electricity supply; for example, an informal
settlement was electrified, and corporate users settled after the NMD supply levels
were determined and agreed. The Ngwathe municipality requires approximately 5%
additional bulk electricity supply. The cause for the additional demand required by the
Ngwathe municipality is in dispute and Eskom maintains it is the result of illegal
connections to the municipality’s electricity supply network.

[14] The two municipalities can aptly be described as ‘dysfunctional’ and
‘delinquent’. I have mentioned that the residents involved in this litigation are all paying

consumers for pre-paid electricity. However, the Ngwathe and Lekwa municipalities
have failed to honour their payment obligations towards Eskom for years. As of the
end of June 2020, the Ngwathe municipality’s arrear indebtedness to Eskom
amounted to R1 259 417 112.66, and that of the Lekwa municipality to R1 125 526 024
as of 31 July 2020. Both municipalities are indisputably in breach of their electricity
supply agreements with Eskom.

[15] Nevertheless, Eskom did not previously limit electricity supply to the two
municipalities to their contractually agreed NMD supply levels. Instead, it continued to
raise penalties in the form of contractually agreed network excess charges for the
monthly exceedance of their NMD capacities. Both municipalities applied for increases
in their NMD supply levels to meet their additional electricity demands. However,
Eskom refused to agree to such increases because the municipalities defaulted on
their payment obligations and an agreement could not be reached on the terms upon
which Eskom would agree to such NMD supply level increases.

[16] In February 2020, Eskom decided to reduce the bulk electricity supply to the
recalcitrant Ngwathe and Lekwa municipalities. On 10 July 2020, Eskom implemented
its decisions. The implementation thereof caused rotational load shedding in the
respective municipalities in addition to the national load shedding applied by Eskom
whenever the national grid faced overloading. Consequently, Parys experienced load
shedding for approximately more than 11 hours a day in certain instances, and the
affected towns in the Lekwa municipality experienced municipal load shedding for up
to two hours at a time on average three times a day.

[17] Apart from an ensuing environmental disaster, each of the affected towns within
the Ngwathe and Lekwa municipalities experienced an unfolding catastrophe with
socio-economic and humanitarian consequences that adversely impacted the health
and well-being of individuals within their jurisdictions. The effects of the additional
municipal electricity interruptions to industries, businesses, professional practices and
the like threatened them with closure or relocation with the concomitant loss of jobs.
Hospitals could not function adequately, and the lives of patients requiring oxygen
were placed at risk. The frequency and duration of the municipal electricity disruptions
paralysed essential services, such as water supply to households and the functioning

of sewage works. Once the electricity was disrupted, the water treatment plants as
well as those pumping water to ensure adequate water pressure came to a standstill
with the result that taps ran dry, households ran out of water, bulk water usage facilities
– industrial and commercial, such as the poultry industry and abattoirs in or close to
the affected towns – ceased functioning. Sewage could then also not be pumped into
the sewage processing plants but instead spilt into the streets of the affected towns,
with the severe associated risk to the health of the communities, and into the Vaal
River.

[18] The Vaal River is the third largest river in South Africa (1 120 km long) after the
Orange River (2 200 km long) and the Limpopo River (1 750 km long) and is the main
water source for the Witwatersrand area. It has its source near Breyten in Mpumalanga
province, east of Johannesburg and about 30 kilometres north of Ermelo, and then
flows westwards to its conjunction with the Orange River southwest of Kimberley in
the Northwest Cape. The construction of the Vaal Dam was completed in 1938. The
dam receives its water inter alia from the Vaal River and ensures water supply
throughout the year even when the Vaal River is not full. The river for many years
regularly experiences pollution of its upper reaches, which affects users downstream.
The Vaal River passes through inter alia Standerton and Parys in its upper reaches.
The frequent electricity disruptions caused water treatment plants in Parys and
Standerton to be dysfunctional for lengthy periods of time, resulting in thousands of
litres of raw sewage pouring into the Vaal River. This contributed to the gradual
destruction of the Vaal River system from those points of sewage pollution and
downstream inter alia to the Vaal Dam.

[19] Efforts on the part of the Ngwathe and Lekwa residents – inter alia through
letters of demand; a meeting between representatives of the Lekwa residents, Eskom
and the Ngwathe municipality; and calls by the Ngwathe residents for the Executive of
the Free State province to intervene – in order to resolve the impasse and disputes
between Eskom and the two municipalities, proved fruitless and brought no relief to
the Ngwathe and Lekwa residents. Negotiations between Eskom and the two
municipalities to increase their contractually agreed NMD supply levels followed but
did not result in any agreement being reached. The amount owing to Eskom by each
municipality is not disputed. However, issues such as the monthly prepayment for the

additional bulk electricity supply and the liability for repairs to and the upgrading of the
infrastructure to accommodate the increase of the contractually agreed NMD supply
levels were not resolved. Hence, the initiation by the Ngwathe and Lekwa residents,
through their associations, of each application in the High Court.

[20] In finding that the residents have established a prima facie right to the interim
interdictory relief they sought, the High Court (Millar AJ) concluded thus:
‘37. While there is no specific reference in Grootboom [Government of the Republic of South
Africa v Grootboom and Others 2001 (1) SA 46 (CC) para 35] to the provision of access
to and the supply of electricity, it is self-evident that the supply of electricity is the
cornerstone upon which all the realization of other rights is based. Homes cannot be built
without electricity. Water cannot be pumped and sewerage reticulation cannot operate
without electricity. Healthcare and in particular the operation of a healthcare facility which
requires at a minimum running water and electricity to operate essential life-saving
equipment cannot be realized without the supply of electricity. In essence, the “inherent
dignity” and very “right to life” of the residents of the municipality is affected by the supply
of electricity.
38. The fact that Eskom relies on the contractual relationship that it has with the respective
municipalities does not detract from the fact that it is a state-owned enterprise.  It is wholly
owned by the state and exists with the benefit of an ostensible monopoly on the supply of
electricity, not only for the purpose of generating income for the state but also for the
promotion of the rights of individual citizens.
39. Accordingly, even though the applicants are themselves not parties to the contracts
between Eskom and the municipalities, Eskom’s enforcement of the terms of those
contracts, in the present instance in regard to limitation of supply to NMD, infringes on the
rights of the applicants and offer no defence to the applicants’ assertion that Eskom is
subject to PAJA.
40. The applicants have the right to the supply of electricity by Eskom. In the present matters
however the question is not whether Eskom is supplying electricity or not but rather
whether it is supplying sufficient electricity. It seems to me at the very least that enjoying
a clear right to be supplied with electricity, the right to be supplied with sufficient electricity
to meet the most basic threshold of the individual rights in the bill of rights must at least
be a prima facie right. To find otherwise would render those rights and the obligation on
the State and its organs – which include Eskom – to fulfil them, nugatory.’
(Footnotes omitted.)

[21] The real question for determination in this appeal is whether the High Court was
correct in finding that the residents have established a prima facie right to grant the
interim interdictory relief, which it granted. It is indisputable that the other requisites
have been met. It is trite that at the level for the granting of an interim interdict, an
applicant must establish a prima facie right, one that may even be open to some doubt.
A prima facie right may on the facts be established - through the application of the
principles set out in Webster v Mitchell 1948 (1) SA 1186 (W) at 1189, read with the
caveat in Gool v Minister of Justice and Another [1955] 3 All SA 115 (C); 1955 (2) SA
682 (C) at 688D-E, and as subsequently further qualified in Ferreira v Levin NO and
Others; Vryenhoek and Others v Powell and Others 1995 (2) SA 813 (W); 1995 (4)
BCLR 437(W) and endorsed by the Constitutional Court in South African Informal
Traders Forum and Others v City Of Johannesburg and Others; South African National
Traders Retail Association v City of Johannesburg and Others 2014 (4) SA 371 (CC);
2014 (6) BCLR 726; [2014] ZACC 8, para 25 - by demonstrating prospects of success
in the review proceedings in due course.

[22] In Resilient Properties (Pty) Ltd v Eskom Holdings Soc Ltd and Others
(Resilient (GJ)),3 Resilient applied for an interim interdict pending a review that was
brought against a decision of Eskom to cut electricity supply to the Gamagara Local
Authority (Gamagara) on a phased discontinuance basis for non-payment by
Gamagara in breach of the electricity supply agreement between Eskom and
Gamagara. Van der Linde J found that the facts showed that a humanitarian crisis
would result from Gamagara’s electricity supply disconnection.4 He found that Eskom
was, on a proper construction of s 21(5) of the ERA,5 read with the electricity supply
agreement between Eskom and Gamagara, entitled to interrupt the supply of electricity
to Gamagara for non-payment. But, he found that ‘given the nature and source of
Eskom’s power, its exercise is, however, administrative action for the purposes of s
33 of the Constitution and PAJA, and constrained, if not by the requirement of

3 Resilient Properties (Pty) Ltd v Eskom Holdings SOC Limited and Others [2018] ZAGPJHC 584; 2019
(2) SA 577 (GJ); [2019] 2 All SA 185 (GJ).
4 Resilient (GJ), paras 44-47.
5 Section 21(5) of the ERA reads as follows:
‘A licensee may not reduce or terminate the supply of electricity to a customer, unless-
(a) the customer is insolvent;
(b) the customer has failed to honour, or refuses to enter into, an agreement for the supply of
electricity; or
(c) the customer has contravened the payment conditions of that licensee.’

reasonableness, then – at best for Eskom - by the baseline standard of rationality’.6
Van der Linde J held that in the light of the catastrophic socio-economic and
humanitarian consequences that were to follow, Eskom’s decision was not rationally
connected to the purpose for which the power to do so was given. He considered that
conclusion sufficient to establish for Resilient a prima facie right, though open to some
doubt, for a review down the line of Eskom’s decision.7

[23] In Eskom Holdings Soc Limited v Resilient Properties (Pty) Ltd and others
(Resilient (SCA)),8 two municipalities, the Emahlaleni Local Municipality (ELM) and
the Thaba Chuweu Municipality (TCLM) faced the threat of having their bulk electricity
supply from Eskom interrupted due to decisions taken by Eskom to incrementally
interrupt the supply of bulk electricity to those municipalities and ultimately to terminate
the supply, as a result of their persistent failure over several years to pay for the bulk
electricity supplied by Eskom in breach of their contractual obligations.  The evidence
presented established that those electricity disruptions and ultimate termination would
have ‘a devastating effect as they “threatened the very fabric of society”, with hospitals,
schools, households and businesses severely disrupted’ and with damage to the
environment as a result of water sources being contaminated due to the damage to
the municipal water and sewage systems.

[24] In dismissing the appeals against the judgment of the Gauteng Division of the
High Court, Pretoria (Hughes J), reviewing and setting aside those decisions of
Eskom, Petse DP, who wrote the unanimous judgment of this Court, comprehensively
referred to the applicable constitutional and statutory framework, which requires no
repetition in this judgment. In summary, electricity is a component of the basic services
that municipalities are constitutionally and statutorily obliged to provide to their
residents.9 The provincial executive, and ultimately the national executive, are
constitutionally and statutorily enjoined to intervene inter alia if a municipality, as a

6 Ibid para 74.
7 Ibid paras 77-80.
8 Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd and Others; Eskom Holdings SOC Ltd v
Sabie Chamber of Commerce and Tourism and Others; Chweu Local Municipality and Others v Sabie
Chamber of Commerce and Tourism and Others [2020] ZASCA 185; [2021] 1 All SA 668 (SCA); 2021
(3) SA 47 (SCA).
9 Resilient (SCA) paras 29-34 (sections 151(1), 151(2), 151(3), 152 and 154(1) of the Constitution; ss
4(2)(f), 73(1), 73(2) of the Local Government: Municipal Systems Act 32 of 2000 (Municipal Systems
Act); s 9(1)(a)(iii) of the Housing Act 107 of 1997 (Housing Act).)

result of a crisis in its financial affairs, is in serious or persistent breach of its obligations
to provide basic services or to meet its financial obligations.10 Eskom has the power
under s 21(5) of the ERA to interrupt the supply of electricity to a municipality.11 Before
Eskom decides to invoke its powers under s 21(5), it must be mindful of its
constitutional obligations as an Organ of State.
‘As an Organ of State, Eskom bears certain constitutional duties.  The relationship
between Eskom on the one hand and the ELM and the TCLM on the other is more
than merely a contractual one regulated purely in terms of the ESA’s [electricity supply
agreements] that the parties concluded.  Eskom supplies bulk electricity to the
Municipalities which, in turn, have a concomitant duty to supply it to the end-users.
The unique feature of this relationship is that Eskom, as an Organ of State, supplies
electricity to local spheres of government to secure the economic and social well-being
of the people. This then brings the relationship within the purview of the IRFA
[Intergovernmental Relations Framework Act 31 of 2005].’12
Organs of State are constitutionally and statutorily required to make reasonable efforts
in good faith to settle intergovernmental disputes.13

10 Ibid paras 35-36(sections 2, 139(1), 139(2), and 139 (3) of the Local Government: Municipal Finance
Management Act 56 of 2003 (MFMA); ss 139(5) and 139(7) of the Constitution.)
11 Ibid paras 47-60.
12 Ibid para 79.
13 Ibid paras 61-67(section 41 of the Constitution provides in relevant part that:
‘(1) All spheres of government and all Organs of State within each sphere must –
(a) preserve the peace, national unity and the indivisibility of the Republic;
(b) secure the well-being of the people of the Republic;
(c) provide effective, transparent, accountable and coherent government for the Republic;
. . .
(h) cooperate with one another in mutual trust and good faith by –
. . .
(ii) assisting and supporting one another;
(iii) informing one another of, and consulting one another on, matters of common interest;
(iv) coordinating their actions and legislation with one another;
(v) adhering to agreed procedures; and
(vi) avoiding legal proceedings against one another.
(2) An Act of Parliament must-
(a) establish or provide for structures and institutions to promote and facilitate intergovernmental
relations; and
(b) provide for appropriate mechanisms and procedures to facilitate settlement of
intergovernmental disputes.
(3) An organ of state involved in an intergovernmental dispute must make every reasonable effort to
settle the dispute by means of mechanisms and procedures provided for that purpose, and must
exhaust all other remedies before it approaches a court to resolve the dispute.
(4) If a court is not satisfied that the requirements of subsection (3) have been met, it may refer a
dispute back to the organs of state involved.’
The Intergovernmental Relations Framework Act 31 of 2005 (IRFA) is the legislative measure
contemplated in s 41(2) of the Constitution.  Disputes arising between different spheres of government

[25] This Court further held that there was a dispute between Eskom on the one
hand and the ELM and the TCLM on the other as contemplated in s 41 of the
Constitution and ss 40 and 41 of the IRFA14 and that ‘Eskom’s decision to interrupt or
terminate bulk electricity supply to the entire Municipality without prior compliance with
Sections 40 and 41 of the IRFA, is inimical to the constitutional obligations that it
bears’.15 Petse DP inter alia said this:
‘[74] As to the question whether there is a dispute between Eskom on the one hand and the
ELM and the TCLM on the other, the following bears emphasis. It is true that there is no real
dispute as to the existence of the debts owed to Eskom by both the ELM and the TCLM. Nor
is there a dispute as to the inability of these Municipalities to make any meaningful payments
themselves due to their parlous financial state. The real disputes concerned the manner in
which these two Municipalities could be enabled or empowered to pay their debts to Eskom
and thus whether it was appropriate in the circumstances to interrupt the supply of electricity
to exact payment from them. It was in relation to these disputes that Eskom and the affected
Municipalities, in collaboration with the other State role players, were constitutionally obliged
to make ‘every reasonable effort’ to avoid or settle, but failed to do so.
[75] I am therefore persuaded that there was a live dispute between Eskom on the one hand
and the ELM and the TCLM on the other, in relation to the manner as to how the debt would
be liquidated and the remedies available to Eskom in the event of default. That the two
Municipalities involved signed acknowledgments of debt detailing how the debt was to be
liquidated cannot assist Eskom. This must be so because the acknowledgments of debt
themselves under the heading “Default” provided in terms that “Eskom may with due regard
to all legislation . . . take whatever legal remedies available to it including disconnection of

and other organs of state are subject to the strictures of IRFA.  (See the preamble, long title, ss 4, 40
and 41 of the IRFA.) Section 40 of the IRFA provides as follow:
‘(1)
All Organs of State must make every reasonable effort -
(a) to avoid intergovernmental disputes when exercising their statutory powers or performing their
statutory functions; and
(b) to settle intergovernmental disputes without resorting to judicial proceedings.
(2)
Any formal agreement between two or more Organs of State in different governments regulating
the exercise of statutory powers or performance of statutory functions, including any
implementation, protocol or agency agreement, must include dispute-settlement mechanisms or
procedures that are appropriate to the nature of the agreement and the matters that are likely to
become the subject of a dispute.’
And s 41 of the IRFA provides as follows:
‘(1)
An Organ of State that is a party to an intergovernmental dispute with another government or
Organ of State may declare the dispute a formal intergovernmental dispute by notifying the other
party of such dispute declaration in writing;
(2)
Before declaring a formal intergovernmental dispute the Organ of State in question must, in good
faith make every reasonable effort to settle the dispute, including the initiation of direct
negotiations with the other party or negotiations through an intermediary.’
14 Resilient (SCA) paras 72-77.
15 Ibid para 80.

supply of electricity . . .  (my emphasis). In the context of the facts of these proceedings the
“relevant legislation” is the IRFA, section 139 of the MFMA and PAJA.
. . .
[80] It must therefore perforce follow that Eskom is under a constitutional duty to ensure that
Municipalities, which are solely dependent on it for electricity supply, are enabled to discharge
their obligations under the Constitution. Thus, it goes without saying that Eskom cannot act in
a way that would undermine the ability of the [m]unicipalities to fulfil their constitutional and
statutory obligations to the citizenry. For as Froneman J said in Allpay Consolidated
Investment Holdings (Pty) Ltd and others v Chief Executive Officer, South African Security
Agency and others [[2014] ZACC 12; 2014 (4) SA 179 (CC); 2014 (6) BCLR 641 (CC) para
49]:
“Organs of state have obligations that extend beyond the merely contractual. In terms of s 8
of the Constitution, the Bill of Rights binds all organs of state. Organs of state, even if not state
departments or part of the administration of the national, provincial or local spheres of
government, must thus “respect, protect, promote and fulfil the rights in the Bill of Rights”.’
[81] . . . Eskom itself realised that the parlous state in which the ELM and the TCLM are
warranted intervention by the provincial government and, if need be, the national government.
But this avenue was not explored because Eskom was not prepared to wait for that process
to unfold. The irony about Eskom’s obdurate stance was that it had indulged the ELM and the
TCLM for far too long. Eskom had inexplicably failed to make any serious attempt for more
than ten years to act in terms of legislative prescripts like s 51(1) of the PFMA. As already
indicated, s 41(3) requires organs of state to exhaust all other remedies to resolve disputes
before they approach a court. True, in this instance, Eskom never approached a court. Instead,
it took the impugned decisions to interrupt electricity supply to the municipalities, hoping that
doing so would coerce the municipalities to pay for the electricity supplied over several years.
This, Eskom asserts, had the desired effect in the Sabie matter that was settled between the
parties. In taking this route, Eskom in effect circumvented the consequences that flow from
the prohibition contained in ss 40 and 41 of the IRFA against instituting proceedings in a court
to settle intergovernmental disputes if the dispute has not been declared a formal
intergovernmental dispute, and all efforts to resolve that dispute have not been exhausted in
terms of chapter 4 of the IRFA and proved unsuccessful. Nothing less than a ‘reasonable
effort, in good faith’ to resolve the dispute will suffice.’

[26] This Court concluded16 that the High Court correctly reviewed and set aside
Eskom’s decisions on the basis that they were irrational and under s 6(2)(e)(iii) of

16 Ibid paras 85-91.

PAJA.17 This is so, Petse DP said, because Eskom’s avowed purpose for the
interruptions of the supply of electricity was to collect the outstanding debt and to
reduce and manage the rate of escalation of the debt. Furthermore, the court held
that:18
‘Eskom’s decision to interrupt bulk electricity supply to the ELM and the TCLM was used as a
leverage to extract payment. This drastic measure, with its catastrophic consequences . . .
was decided upon at a time when Eskom knew full well that it would not result in the financially
strapped municipalities settling their debt, at least within the short space of time allowed by
Eskom when they had all along struggled to do so for several years, and since 2002 in the
case of the TCLM. And these measures were adopted by Eskom against the backdrop that
Eskom itself had come to realise that without the intervention of both the national government
and the provincial government it was beyond the power of the ELM and the TCLM to turn their
fortunes around on their own. Eskom sought to justify its decisions by contending that the
other reason why it embarked on its chosen course was to contain the spiralling of the debt. I
have already explained above that Eskom, as an organ of state, cannot act in a manner that
renders another organ of state unable to discharge its constitutional and statutory obligations.
It must therefore follow that Eskom’s impugned decisions were irrational.’
Furthermore, Eskom’s decisions constitute administrative action as contemplated in s
1 of PAJA, and they ‘failed to take into account relevant considerations that should
have informed those decisions’.19

[27] Eskom argues that it is distinguishable because Resilient (SCA) was concerned
with phased interruptions and ultimate terminations of bulk electricity supply to
municipalities, instead of a reduction of bulk electricity supply to contractually agreed
NMD supply levels and finds no application in casu.  It, therefore, raises similar
arguments in this matter to those raised by it in Resilient (SCA), such as that it was
merely enforcing its rights arising from the electricity supply agreements between it
and the Ngwathe and Lekwa municipalities; an increase in the NMD supply levels are
in terms of those electricity supply agreements, Eskom’s NMD rules and the NERSA
rules not merely for the asking but requires its approval; it has the power in terms of s
21(5) of the ERA to interrupt or reduce the supply of electricity to an entire municipality;

17 Section 6(2)(e)(iii) of PAJA provides that ‘[a] court or tribunal has the power to judicially review an
administrative action if . . . the action was taken . . . because irrelevant considerations were taken into
account or relevant considerations were not considered’,
18Resilient (SCA) para 88.
19 Ibid para 91.

it is the Ngwathe and Lekwa municipalities that are constitutionally and statutorily
obliged to provide basic services to their residents and the residents, therefore, ought
to have approached a court and obtained a mandamus against each municipality.
Eskom’s attempt at distinguishing Resilient (SCA) from the present matter is artificial.
Resilient (SCA) is a case in point, and the principles enunciated therein are of equal
application in this matter.

[28] The facts in Resilient (SCA), Resilient (GJ) and the instant matter are similar.  I
accept that the potential of a humanitarian crisis and adverse environmental
consequences established in the Resilient cases should Eskom have implemented its
decisions to incrementally interrupt and ultimately terminate the bulk electricity supply
to the municipalities involved are more severe than the horrendous consequences that
were prima facie established to have been unfolding in casu. However, Eskom
permitted the Ngwathe and Lekwa municipalities for years to exceed their contractually
agreed NMD supply levels and decided to reduce the bulk electricity supply to them to
their contractually agreed NMD levels during February 2020, which decisions it
implemented on 10 July 2020. Despite Eskom’s protestations to the contrary, it is clear
at the level of a prima facie right that is required for an interim interdict that it took and
implemented those decisions to collect the outstanding debt owed to it by the Ngwathe
and Lekwa municipalities and to reduce and manage the rate of escalation of the debts
in the event of it agreeing to increase the NMD supply levels to meet their present
additional electricity demands.

[29] Although there is no real dispute as to the existence of the debts owed to Eskom
by both the Ngwathe and Lekwa municipalities or as to the inability of these recalcitrant
and dysfunctional municipalities to make any meaningful payments themselves due to
their parlous financial state, disputes between Eskom on the one hand and the
Ngwathe and Lekwa municipalities on the other, as contemplated in s 41 of the
Constitution and inter alia ss 40 and 41 of the IRFA, have prima facie arisen in relation
to the manner in which the debt would be liquidated, the remedies available to Eskom
in the event of default, and the terms upon which Eskom would agree to increase their
historically agreed NMD levels to meet their present electricity supply demands.

[30] Those intergovernmental disputes triggered the constitutionally and statutorily
required dispute resolution mechanism for Organs of State prescribed in the IRFA,
and all efforts to resolve those disputes should have been exhausted in terms of
chapter 4 of the IRFA. But the dispute resolution mechanism was prima facie not
followed. It has been prima facie established that Eskom itself realised that the parlous
state of the Ngwathe and Lekwa municipalities warranted intervention by the provincial
government and, if need be, the national government. This avenue was not explored
because Eskom was not prepared to wait for that process to unfold.

[31] Eskom, therefore, was not constitutionally and statutorily permitted to
unilaterally reduce the bulk electricity supply to the Ngwathe and Lekwa municipalities
to their historic contractually agreed NMD levels without it and the two municipalities,
in collaboration with the other state role-players, first making every reasonable effort
to settle the intergovernmental disputes.  Had the dispute resolution mechanism been
followed, it may well have resulted in the intervention of both the provincial and national
levels of government, without which the Ngwathe and Lekwa municipalities are
unlikely to turn their fortunes around on their own.  Instead, Eskom’s decisions to
reduce the bulk electricity supply rendered the Ngwathe and Lekwa municipalities
unable to fulfil their constitutional obligations owed to their citizenry, which resulted in
a catastrophe unfolding with hospitals, schools, households and businesses severely
disrupted and with damage to the environment as a result of water sources being
contaminated due to the damage to the municipal water and sewage systems.

[32] The residents, therefore, have established a prima facie right at the level
required for interim relief that Eskom’s decisions and implementation thereof are
judicially reviewable and that they have prospects of success in having them set aside
on the basis that they undermine constitutional and statutory imperatives. All the
requirements for granting interim interdictory relief having been established, the High
court correctly granted the interim interdicts in all the circumstances of each case.

[33] In the result, the following order is made:
1. The appeal in Eskom Holdings Soc Ltd v Lekwa Ratepayers Association and Others
(High Court case no. 35054/2020) is dismissed with costs, including those of two
counsel.

2. The appeal in Eskom Holdings Soc Ltd v Vaal River Development Association and
Others (High Court case no. 31813/2020) is dismissed with costs, including those of
two counsel.

_______________________
P A MEYER

ACTING JUDGE OF APPEAL

Appearances:

Appellant’s counsel:

SL Shangisa SC (assisted by L Rakgwale)
Instructed by:

Maponya Attorneys, Arcadia, Pretoria

Maponya Attorneys, Bloemfontein

First Respondent’s counsel:
H van Eeden SC (assisted by DH Wijnbeek)
Instructed by:

Lou van Wyk Inc., Parys

Andreas Peens Attorneys, Koster
C/o Rosendorff Reitz Barry CAJ van Rensburg,
Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
21 January 2022
Status:
Immediate

The following Summary is for the benefit of the media in the reporting of this case and
does not form part of the judgments of the Supreme Court of Appeal.
Eskom Holdings Soc Ltd v Lekwa Ratepayers Association and Others; Eskom Holdings Soc
Ltd v Vaal River Development Association (Pty) Ltd and Others (870/20) [2022] ZASCA 10
(21 January 2022)

Today the Supreme Court of Appeal (SCA) handed down judgment and dismissed an appeal
against the decision of the High Court, Gauteng Division, Pretoria, with costs, including those
of two counsel.
The primary issue before the SCA was this: whether the residents of two municipalities have
established the requisite prima facie right at the level required for interim relief to restrain
Eskom from implementing its unilateral decisions to reduce its bulk electricity supply to the
municipalities concerned to historic, outdated and inadequate contractually agreed supply
levels without prior compliance with the constitutional and statutory imperatives relating to
intergovernmental dispute resolution mechanisms. Eskom’s decisions and the implementation
thereof rendered the two municipalities unable to fulfil their constitutional obligations owed to
their citizenry, resulting in a catastrophe unfolding with hospitals, schools, households and
businesses severely disrupted and with damage to the environment as a result of water
sources being contaminated, particularly the Vaal River, due to damage to the municipal water
and sewage systems.

In a unanimous judgment, the Supreme Court of Appeal held that the residents established
the requisite prima facie right on the facts by demonstrating prospects of success in review
proceedings in due course to review and set aside Eskom’s decisions on the basis that they
undermine constitutional and statutory imperatives. The relationship between Eskom on the
one hand and municipalities on the other is more than merely a contractual one regulated
purely in terms of the electricity supply agreements that the parties concluded.  Eskom
supplies bulk electricity to municipalities which, in turn, have a concomitant duty to supply it to
the end-users.  The unique feature of this relationship is that Eskom, as an organ of state,
supplies electricity to local spheres of government to secure the economic and social well-
being of the people. This brings the relationship within the purview of the Intergovernmental
Relations Framework Act 31 of 2005 (IRFA). Organs of State are constitutionally (s 41 of the
Constitution) and statutorily (ss 40 and 41 of the IRFA) required to make reasonable efforts in
good faith to settle intergovernmental disputes.
Although there is no real dispute as to the existence of the debts owed to Eskom by both
municipalities or as to the inability of these recalcitrant and dysfunctional municipalities to
make any meaningful payments themselves due to their parlous financial state, disputes
between Eskom on the one hand and the two municipalities on the other, as contemplated in
s 41 of the Constitution and in ss 40 and 41 of the IRFA, have prima facie arisen in relation to
the manner in which the debt would be liquidated, the remedies available to Eskom in the
event of default, and the terms upon which Eskom would agree to increase their historically
agreed electricity supply levels to meet their present electricity supply demands. Those
intergovernmental disputes triggered the constitutionally and statutorily required dispute
resolution mechanism for organs of state prescribed in the IRFA, and all efforts to resolve
those disputes should have been exhausted in terms of chapter 4 of the IRFA. But the dispute
resolution mechanism was prima facie not followed.
Eskom, therefore, was prima facie not constitutionally and statutorily permitted to unilaterally
reduce the bulk electricity supply to the two municipalities to their historic contractually agreed
electricity supply levels without it and the two municipalities, in collaboration with the other
state role-players, first making every reasonable effort to settle the intergovernmental
disputes.  Had the dispute resolution mechanism been followed, it may well have resulted in
the intervention of both the provincial and national levels of government, without which the two
municipalities are unlikely to turn their fortunes around on their own.