Eskom’s municipal debt crisis far from resolved
Exactly what is owed by who is not entirely clear
The Eskom municipal debt crisis is far from being resolved amid uncertainty about which municipality or government entity owes what to the troubled power utility.
Briefing parliament’s finance watchdog, the standing committee on public accounts (Scopa), on the issue, public works minister Patricia de Lille said it is incorrect to say her department owes Eskom R3bn.
In December 2019, De Lille’s department was flagged as one of the main culprits at national government level contributing to Eskom’s debt, with a total debtors’ book of R3.1bn. This comes at a time that municipal debt to Eskom is continuing to grow at a frightening rate of almost R1bn a month as a number of municipalities fail to pay their bills. Municipalities owe Eskom close to R24bn.
At the same time, 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. Eskom has previously threatened to cut off electricity to the municipalities.
With a mounting debt of more than R450bn, 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.
De Lille said it was incorrect to say her department owed Eskom R3.1bn because under the current government system the department pays all municipal accounts. In come cases the department pays the Eskom accounts for national departments too.
Other government departments then have to reimburse the department of public works, she said, though this has not always been the case.
“I can report, chairperson, that the national government departments owe the department of public works just over R3.4bn in relation to municipal services as at the 31st of December 2019,” the minister said.
De Lille said her department has since taken a decision to devolve the settling of municipal services accounts to the user departments from April 2020 and this has been communicated to all stakeholders.
She said a departmental campaign had established that the initial R3bn reported as owing was unreliable and incorrect. It was a serious offence for municipalities to report inflated figures and provide wrong information.
De Lille said one example was when the Bushbuckridge municipality in Mpumalanga disclosed a debt of just over R900m. However, after verification and reconciliation, the department had agreed with the municipality that the outstanding amount is R6.9m.
De Lille said in August 2019 that a campaign was launched to settle all outstanding national government debt owed to municipalities and Eskom. The department also introduced consequence management, and this had led to ten officials being disciplined for not paying municipal accounts within 30 days.
The campaign is monitored on a weekly basis by the department’s CFO, who convenes conferences via video link with all regional officials. There is also a monthly meeting with the National Treasury.
Scopa chairperson Mkhuleko Hlengwa on Tuesday described the government’s attempts to address the Eskom debt crisis as a “dismal failure”.
An interministerial committee was established in early 2017 to look into the Eskom municipal debt crisis. However, while it made recommendations, its mandate was not renewed after the general election. Some of the recommendations included the installation of smart, pre-paid electricity and water meters; debt restructuring; and renegotiating the amounts owed and interest payments.