Over half of SA’s 257 municipalities default on Eskom bills, jeopardising the ailing power utility’s financial recovery
23 August 2023 - 05:00
byEditorial
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One of the biggest risks to the bumper R254bn bailout Eskom has received from Treasury to plug the utility’s debt hole is the billions in arrears owed by municipalities.
The amount has ballooned from R35bn in 2021, to R45bn in 2022 and to about R56bn by end-March. Municipalities now owe Eskom R63bn in arrear debt and the power utility has warned this could increase up to R68bn by end-March 2024.
As part of its intervention to put Eskom on a more secure financial footing, and to prevent the need for another bailout in the future, Treasury launched a initiative in May that would allow municipalities to have their Eskom debt written off over a period of three years.
However, to qualify, municipalities have to comply with 14 financial management and other conditions.
More than half of the 257 municipalities in the country have defaulted on their Eskom bills. Some owe billions, and about 50 owe more than R100m. But according to electricity minister Kgosientsho Ramokgopa, only 13 municipalities have so far applied for the debt relief programme, and just seven applications have been approved.
It seems the strict financial management conditions imposed by Treasury might be a bridge too far for SA’s notoriously poorly run third sphere of government. Remember, for the 2021/2022 financial year, only 38 municipalities achieved a clean audit.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
EDITORIAL: Eskom’s R254bn bailout on shaky ground
Over half of SA’s 257 municipalities default on Eskom bills, jeopardising the ailing power utility’s financial recovery
One of the biggest risks to the bumper R254bn bailout Eskom has received from Treasury to plug the utility’s debt hole is the billions in arrears owed by municipalities.
The amount has ballooned from R35bn in 2021, to R45bn in 2022 and to about R56bn by end-March. Municipalities now owe Eskom R63bn in arrear debt and the power utility has warned this could increase up to R68bn by end-March 2024.
As part of its intervention to put Eskom on a more secure financial footing, and to prevent the need for another bailout in the future, Treasury launched a initiative in May that would allow municipalities to have their Eskom debt written off over a period of three years.
However, to qualify, municipalities have to comply with 14 financial management and other conditions.
More than half of the 257 municipalities in the country have defaulted on their Eskom bills. Some owe billions, and about 50 owe more than R100m. But according to electricity minister Kgosientsho Ramokgopa, only 13 municipalities have so far applied for the debt relief programme, and just seven applications have been approved.
It seems the strict financial management conditions imposed by Treasury might be a bridge too far for SA’s notoriously poorly run third sphere of government. Remember, for the 2021/2022 financial year, only 38 municipalities achieved a clean audit.
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