Although Eskom has the right to turn off the light for defaulters, it appears to be doing everything in its power not to do so. (Dean Hutton/Bloomberg/Getty Images)
Eskom’s arm was twisted — for now — to keep the lights on at municipalities who owe the power utility billions of rand in unpaid tariffs.
Although Eskom has the right to turn off the light for defaulters, it appears to be doing everything in its power not to do so. Last week, the utility and the Mangaung metropolitan municipality in the Free State reached an eleventh-hour agreement to avert a dark December.
Giving concessions to defaulting debtors is now common practice. That includes reducing the interest rate charged on overdue municipal bulk accounts from prime plus 5% to prime plus 2.5%. Payment terms have also been extended from 15 days to 30 days. Payments received from municipalities are allocated to capital first and then to interest.
But these concessions have not made a dent in what Eskom chairperson Jabu Mabuza called a culture of non-payment. Speaking to Parliament’s standing committee on public accounts (Scopa) this week, he said Eskom is owed R26-billion.
He added that the problem of defaulting municipalities has worsened since an interministerial task team was set up by former president Jacob Zuma to look into the problem.
“Either we misdiagnosed or we misprescribed the therapy. The debt has become bigger,” he told Scopa.
“At the establishment of the interministerial task team [in 2017], Eskom was owed R9.8-billion. In October 2019 that number is R26-billion. What’s more worrisome is that between March and September 2019 this number has gone up by another R6-billion. So, by this trendline line, this debt will be at R30-billion by the end of the financial year,” Mabuza said. “We have to collect our debt. Or stop supplying customers who won’t pay for it. We need to be paid for what we have supplied. If you don’t pay for your bed, Joshua Doore [furniture store] will come and collect your bed.”
But Eskom is stuck in a tricky situation and doesn’t have the wholehearted support of MPs when it comes to recouping its money.
The ANC’s Mervyn Dirks, for example, said the debt is as good as gone. “I’m hearing figures of outstanding debt of three, four years ago. Most of this debt as already prescribed, and consumers are aware that that debt has prescribed so you are not going to collect that money. Write-offs are going to happen. We must forget about the old debt.”
This is a sentiment shared by Thembi Nkadimeng, the president of the South African Local Government Association (Salga), the umbrella body representing municipalities.
Nkadimeng said laws may have to be drafted to cancel some of the debt owed by municipal households to Eskom. “There’s not even a single employed person in some of these households [which owe R165-billion in unpaid electricity bills]. Yes, there are households who can afford and simply do not want to pay. But we need to find a way to balance.”
Opposition party MPs said the ANC was playing politics. Agreeing to Eskom turning off the lights to municipalities who don’t pay could be disastrous ahead of the 2021 local government elections in municipalities where it governs.
The Democratic Alliance’s Benedicta van Minnen said the ANC was gambling with the future of Eskom and the country’s economy.
“Despite the serious threat non-payment has on the future of Eskom and the South African economy, the South African Local Government Association, an organisation tasked with municipal oversight, seems remarkably unconcerned about this spiralling debt — instead raising all kinds of excuses about the non-payment by municipalities.”
Scopa called on municipalities to pay their Eskom debts. “The fact of the matter is that Eskom must be paid. If the payments are not made it means there must be more bailouts and we do not have resources for these bailouts,” said committee chairperson Mkhuleko Hlengwa.