Emfuleni cannot pay Eskom R8bn debt ‘because residents don’t have jobs’

Emfuleni municipality finance MMC Hassan Mako has blamed high unemployment, which hampers revenue collection, for the municipality’s inability to pay the R8bn it owes Eskom.

“This area been affected by disinvestment in the steel industry, which has caused our people to lose jobs. It makes it difficult for us to collect revenue, and of course one of the weaknesses is the systems that are put in place,” Mako said in an interview with Newzroom Afrika.

“With the economy in the country and in the Vaal, many people are losing their jobs. The Covid-19 effect has made it very difficult for the municipality to assess the right numbers as far as revenue collection is concerned.

“However, we are trying to mitigate those particular circumstances to ensure that we stimulate the economy. We have started with the special economic zone, where we have donated about 600ha of land, including the Vaal River City investment. The construction started, worth R1.4bn. These are the issues that we are looking at,” he said.

The municipality’s bank accounts were recently attached to Eskom to ensure that the money collected for electricity is paid directly to the power utility. Mako expressed concern about the municipality’s inability to use grants allocated for service delivery. He warned that this could lead to a rapid decline in services.

“Basically, an attachment means that the municipality is unable to transact. It means that over a particular period, service delivery will collapse, and if it persists, if there are grants that are supposed to be spent, those particular grants might not be spent and the National Treasury might be in a position to withdraw those particular grants that might have been allocated to the municipality.”

He said the municipality was not happy with how the matter was handled by Eskom and had therefore reverted to the courts.

“We think that we have not been treated fairly, and Eskom in Gauteng is trying to play a big role and putting a gun to the head of the municipality. As much as we have knowledge of the debt, we said that the July 5 court judgment would assist us in establishing the distribution agency agreement whereby both Eskom and Emfuleni would work together to see how we can amicably recoup this debt.”

He said dissolving the municipality was not a solution.

“Just like taking the municipality and administration, all spheres of government need to come together to work and find an economic solution. I can just raise an argument as far as the allocation of funding is concerned.

“Local municipalities received only 10% of the funding coming from the National Treasury, which is not sufficient to deal with all service delivery issues.”

The municipality has for years been battling to pay its debt to Eskom. The matter has dragged out in courts for years.

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