Departments owe struggling municipalities R9bn
Municipal debt to Eskom is growing at a frightening rate of almost R1bn a month
National and provincial government departments owe some of the country’s struggling municipalities just over R9bn for services, co-operative governance & traditional affairs minister Nkosazana Dlamini-Zuma has revealed.
Many municipalities in turn are struggling to service their own mounting debt obligations, notably to cash-strapped state power utility Eskom.
Municipal debt to Eskom is growing at a frightening rate of almost R1bn a month as a number of municipalities fail to pay their bills. Municipalities are owed more than R140bn by residents for services. Some residents have attributed their failure to pay for electricity and other municipal services to high levels of unemployment and poverty. The power utility has previously threatened to cut off supply to the municipalities.
With a mounting debt of R440bn, which it cannot service from revenue, Eskom, which supplies virtually all of SA’s power, is regarded as a major risk to SA’s finances.
Responding to questions in parliament last week, Dlamini-Zuma, who is leading an interministerial task team to address the municipal-Eskom debt problem, said the total debt to municipalities for services rendered by national departments amounted to R3.5bn, while provincial departments owed R5.8bn as at June 30.
Zooming in on national government departments, Dlamini-Zuma said the main contributor to the debt was the department of public works, with a total debtors’ book of R3.1bn.
DA MP Cilliers Brink had asked the minister to provide details on national government departments that owe money to municipalities for rates, tariffs and charges that remain unpaid for more than 30 days,
“What are the reasons that the specified departments are not paying their municipal accounts?” asked Brink.
Dlamini-Zuma cited several reasons, including that some state property had not been surveyed and its ownership not verified. Property records did not exist in some cases, and the record of some registered state-owned property was not consistent with the record at the deeds office.
Dlamini-Zuma said the property rates debt has accumulated over the years because the registered property ownership has not been verified and confirmed.
“There are insufficient budget allocations by organs of state to service current year debt and historic[al] debt, property rates claims on communal land where there are schools, clinics and police stations and hospitals, and interest accruing from the disputed accounts and outstanding debt, all of which contribute to the recurring debt,” she said.
The minister said once the disputes have been resolved and the correct ownership for each property has been established, government departments will be expected to set new priorities within their budgets and accommodate the outstanding municipal debt. Additional funding will be requested from the Treasury for those departments that will not be able to reprioritise, Dlamini-Zuma said.