/ 20 April 2023

Mashatile: Government helps municipalities repay debt to Eskom

Paul Mashatile
Deputy President Paul Mashatile. Photo: (Morapedi Mashashe/Getty Images & Christopher)

The government has been helping municipalities pay debts owed to Eskom and water boards, Deputy President Paul Mashatile said on Thursday.

“Government has introduced a debt relief package for Eskom that is intended to improve the utility’s balance sheet whilst proposing that Eskom writes off some of the municipal debts under strict conditions with guidance from the national treasury,” Mashatile told the National Council of Provinces during his maiden question and answer session in the upper house of parliament.

By the end of December 2022, municipalities owed Eskom R56.3 billion, up from R44.8 billion in March 2022.

He said the municipal debt relief would be conditional and application-based, adding: “This relief is aimed at correcting underlying behaviour and oppression practices in defaulting municipalities, hence parallel to this process, Eskom is introducing a smart metering solution to change consumer behaviour by reinforcing a culture of payment for services rendered.”

Mashatile said a key assumption considered in the debt relief determination was the implementation of an 18.65% electricity tariff increase approved by the National Energy Regulator of South Africa for Eskom customers, which began in April. 

“Without this increase the debt relief arrangement is not sustainable,” the deputy president said.

Mashatile described municipal debt as a crisis that was worsening Eskom’s financial situation. The treasury has proposed that the state-owned power utility receive R254 billion in debt relief over the next three years, Finance Minister Enoch Godongwana announced in his budget speech to parliament in February.

Mashatile also spoke about municipalities’ debts to water boards, which were owed R60.1 billion as of December.

He said that to strengthen billing and revenue collection to address the escalating debt, the government would facilitate the adoption of credit control and debt recovery measures across all water boards and the installation of bulk prepaid metres in municipalities, especially those with a poor payment record.

“The success of all these relief measures is dependent on coordination across all spheres of government,” Mashatile said.

“This is why the government will continue working on all sectors of society to increase and build sustainable economic activities in all municipalities to create viable tax bases, to develop revenue and economic development.”