Carol Paton Writer at Large
Crippling: Soweto residents march against high electricity tariffs in 2015. Municipalities’ debt to Eskom reached R13.6bn at the end of March, a 30% jump on the previous year. Picture: PUXLEY MAKGATHO
Crippling: Soweto residents march against high electricity tariffs in 2015. Municipalities’ debt to Eskom reached R13.6bn at the end of March, a 30% jump on the previous year. Picture: PUXLEY MAKGATHO

Eskom will be unable to arrest spiralling municipal debt unless political leaders tell people they must pay for electricity, says a top Eskom executive.

Municipalities’ debt to Eskom has grown exponentially, reaching R13.6bn at the end of March, a 30% jump on the previous year. In addition, Soweto residents who are billed directly by Eskom also owe the company about R12bn.

Eskom is in a dire financial position with insufficient revenue to service its enormous debt and tariffs that do not allow it to recover all costs.

Ayanda Noah, Eskom’s group executive for customer services, said on Tuesday that while several solutions are being tried to recover debt, the crucial missing ingredient is political will.

The top 10 defaulting municipalities owe Eskom a total of R9.5bn. Two pilot studies in which municipalities were assisted to get billing systems, tariffs and prepayment meters in place had succeeded, except in one regard: that township residents are not willing to pay, Noah said.

"It has been successful but we have not been able to get into the townships because residents are reluctant to pay. So the biggest challenge is the culture of nonpayment … we also recognise that most of them are unemployed … but I cannot overemphasise the importance of getting our political leaders to … push for a change to the culture of nonpayment," said Noah.

While Eskom has a historical debt problem with Soweto, where households are direct Eskom customers, the bigger challenge is now that entire municipalities are defaulting and not paying over what money they have collected from paying customers. At least five municipalities consequently face six-to seven-hour supply interruptions daily, putting businesses and jobs at risk.

Dozens of business have been forced to take to the courts to stop the cut-offs and to offer to pay Eskom directly. In one case involving Lekwa municipality, which includes Standerton, an deal has been reached through the court to allow direct payment. Eskom now receives part of the revenue it has billed Lekwa but not all of it.

"Where we have that [direct payment] arrangement, Eskom is getting something, but the municipality is not paying its portion … in that situation we can’t cut off the municipality anymore," Noah said.

While going to court is a long and expensive route for companies to take to secure electricity for which they are paying, there are few other solutions.

Eskom does not have a licence to supply businesses that are supplied by the municipality. It also does not own the distribution infrastructure, which in most cases is owned by the municipality, so selective cut-offs for paying and nonpaying customers cannot be done.

An interministerial task team headed by the minister of co-operative governance established in February 2017 is still grappling with the matter.

patonc@businesslive.co.za

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