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R13.5-billion municipal debt burden ‘really beyond Eskom’

Municipalities owe Eskom R13.5-billion – a situation which requires intervention by the government, South Africans and Parliament, the portfolio committee on public enterprises has heard.

Members of Eskom’s board on Wednesday briefed the committee on the utility’s annual performance and turnaround plan.

Acting chief financial officer Calib Cassim explained to the committee that the year ahead will be a tough one for Eskom, with the power utility having to face challenges related to low tariff increases granted by the regulator as well as municipal debt.

Ayanda Noah, group executive of customer services, provided details on the impact of municipal debt on Eskom’s financial position.

Noah explained that in 2016 municipal debt stood at R6-billion, escalating to R13.5-billion by 2018. “It is really beyond Eskom,” she said.

“To get a sustainable solution full support is required from Parliament, government and all South Africans that care for their country,” she said.

Noah unpacked Eskom’s credit control processes. Consumers who receive electricity directly from Eskom will have their power disconnected if they fail to pay outstanding accounts after 40 days.

The power is only reconnected once the full bill as well as the reconnection fee is paid, Noah explained.

But the process is different for municipalities, and the credit control process is ineffective, she said.

Noah explained that in the past she was instructed not to interrupt electricity supply by former CEO Tshediso Matona.

Last year a compromise was reached to have interruptions of between 4.5 hours and 6.5 hours.

Defaulting municipalities in turn have fallen into the pattern of making new payment arrangements which are more affordable, Noah explained. “What we found … (is) municipalities do not honour their arrangements,” she said.

Noah said the installation of smart meters at a municipality in the Free State and prepaid meters at two municipalities in the Eastern Cape are yielding positive results, and the municipality in the Free State has managed to generate more revenue.

Municipal debt war room

Another solution is to establish a municipal debt war room. However, Noah said an inter-ministerial committee task team is handling the matter.

She said it is important to “accelerate activities” to recover monies owed to Eskom. — Fin 24

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Lameez Omarjee
Lameez Omarjee
Parliamentary reporter at Fin24.com

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