Municipal debt is more than municipalities’ debt to Eskom
Non-payment by households for electricity and water is the largest contributor to this municipal debt
Municipalities owe Eskom R23.5bn and the water boards R14.9bn, but this level of debt is not nearly as weighty as the R165.5bn owed to municipalities by households and the state.
The culture of non-payment for services by citizens, attributed to poverty and the high level of unemployment, has been roundly condemned both by President Cyril Ramaphosa and finance minister Tito Mboweni.
The debt owed to municipalities has been climbing steadily from R106.6bn in 2014/2015, according to figures provided by the Treasury on Tuesday to parliament’s portfolio committee on human settlements, water and sanitation.
Presentations were also made by officials of the department of co-operative governance and traditional affairs and the SA Local Government Association (Salga).
Public enterprises minister Pravin Gordhan gave the municipal debt figure to Eskom in a written reply to a parliamentary question earlier this month, while Salga manager William Moraka provided MPs with the total municipal water debt. Moraka noted that of the total amount of R165.5bn owing to municipalities, R50.2bn is for water services.
Payment for water by households has been steadily declining from 64.9% in 2006 to 40.9% in 2018.
According to Treasury data as at end-June 2019, households owed municipalities R118.6bn, government owed them R10.3bn, and business and “other” owed R36.6bn. Government debt has also risen sharply from the R3.85bn as at the end of the 2014 financial year.
National government owes R3.5bn, R3bn of which is due by the department of public works; while provincial government owes R5.8bn, with R3.7bn of this owed by the provincial public works, roads and transport departments. About R1bn of the government debt is due by “other” entities.
According to a Treasury official, many provinces claim that the funding allocation by national government in the equitable share is insufficient to meet the demands of the municipal bills. The rate of increase in the provincial equitable share has not kept pace with the rate of increase in municipal tariffs.
State ownership of property has been the largest contributor to the debt spiraling out of control.
An inter-governmental debt forum consisting of several departments and Salga has been established at national level to resolve the issue of state debt owed to municipalities. Also, debt forums have been set up in each province to resolve disputes between provincial departments and municipalities with the aim of settling arrears.