Salga declares dispute with Treasury over Eskom debt

Thirty nine municipalities are in debt with Eskom. (David Harrison, MG)

Thirty nine municipalities are in debt with Eskom. (David Harrison, MG)

The approximate amount of R1-billion is beng witheld from municipalities who have outstanding debt to Eskom.

“We have sent a notice to National Treasury today to notify them that we are declaring a dispute,” the South African Local Government Association (Salga) chairperson Thabo Manyoni, also the mayor of Mangaung, told Parliament’s standing committee on appropriations.

Manyoni said last month’s decision to withhold the equitable share of 59 municipalities with outstanding water and electricity bills was short-sighted as it painted all defaulting municipalities with the same brush, ignoring the fact that some could never be viable.

“The manner in which Eskom has been acting, it leaves much to be desired,” he added and went on to cite last week’s 10-hour long blackouts in Soweto’s Orlando neighbourhood.

“You can’t have hospitals there running on generators for 10 hours, magistrates’ courts running on generators for 10 hours. The manner in which this is being handled, it is making it difficult for service delivery.”

Eskom ascribed the outages to loadshedding, followed by a tripped transformer.

Eskom showing no regard for Soweto
But the ANC-led City of Johannesburg has cried foul and accused Eskom of showing utter disregard for residents of Soweto and attempting to “sabotage” the ruling party in the run-up to next year’s local government polls. Soweto owes Eskom R8-billion, of which half is overdue.

A Treasury official who asked not to be named said the net effect of declaring a dispute would be an obligation on Treasury to immediately release the remainder of R2.2-billion being withheld from municipalities, because of the legal prescript that inter-governmental disputes be resolved at a political level, rather than through adversarial litigation.

It has already in recent weeks released some R1.2-billion to 20 municipalities who have entered into payment agreements with Eskom.
The cash-strapped utility is owed about R9-billion in arrears by municipalities.

Unfair payment deadline
Eskom on Wednesday came in for further criticism for its 15-day payment deadline, which is seen as an unfair exception that is designed to ease the utility’s cash flow but piles more pressure on municipalities and hikes their interest payments.

The move by Treasury has also caused tension with the department of co-operative government and traditional affairs.

Cogta deputy director general Muthotho Sigidi, also the national transfer officer in the department, said the decision was communicated to municipalities by Treasury before Finance Minister Nhlanhla Nene informed his co-operative governance counterpart Pravin Gordhan.

“We received a letter from the minister of finance after the fact.”

He said those municipalities whose funding from national government was still being withheld, were in a tenuous position because once funding was withheld for 60 days, it could be re-allocated to other budgets.

“We are now over 30 days, at 40 days.” – ANA

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