Cabinet to consider plan to tackle municipal debt to Eskom
The cash-strapped utility is owed more than R14bn by municipalities, with the top 10 nonpayers owing about R10bn
Cabinet will consider a detailed implementation plan in February to reduce the large amount of money municipalities owe Eskom, and increase the power utility’s rate of collection.
Cash-strapped Eskom is owed more than R14bn by municipalities, with the top 10 nonpayers owing about R10bn. In turn, municipalities are owed R139bn by residents for services.
Some residents have attributed their failure to pay for electricity to high levels of unemployment and poverty. Eskom had previously threatened to cut off supply to the municipalities.
One of the proposals on the table to improve Eskom’s rate of collection is the installation of prepaid meters, said co-operative governance and traditional affairs minister Zweli Mkhize, who chaired an interministerial task team looking into the municipal debt crisis.
“Existing evidence indicates much higher rates of collection from prepaid meters as compared to conventional meters. The experience of the performance of prepaid meters must be tabled to cabinet to show lessons learnt in different municipalities where prepaid meters are already being implemented,” said Mkhize in his end of year statement on Thursday.
He said another suggestion was that the installations must be done in a manner that will not negatively affect on the fiscus.
“This means various options should be explored to ensure a package can be implementable without unreasonably passing the cost to consumers. The implementation plan must provide for the protection of the indigent population in terms of the free basic services. The different situations applicable to Eskom and water boards must be analysed to avoid a one-size-fits-all approach to the solution,” said Mkhize.
Involvement of independent collecting agents must be considered to facilitate the installation and the rollout of prepaid meters to improve the efficiency of collections, Mkhize said.
“A major challenge continues to be the high number of municipalities that are unable to pay their debts to Eskom and water boards. A lot of progress was made this year in dealing with this matter. Our position is that we need to find lasting solutions to the problem through strengthening municipalities as short-term solutions such as litigation will not solve the problem in a sustainable manner,” the minister said.
Strict management of defaulting municipalities was also required. Mkhize said the directors-general must create a protocol to detect defaulting municipalities and interventions to bring them to line long before there is a need for Eskom to institute legal action. The protocol must involve holding municipal leaders to account and consequence management, Mkhize said.
The cabinet adopted the recommendations of the interministerial task team on Eskom debt and gave two months for the implementation plan to be developed.
“Cabinet will consider a detailed implementation plan in February 2019. It is urgent that such an implementation plant will go a long way to prevent future challenges of low collection for electricity and reduce the debt as well as promote responsible communities that take responsibility for payment of services. We have also made progress in dealing with litigation arising from debts owed to Eskom,” said Mkhize.