Government concerned about crippling Eskom debt

Thursday, June 14, 2018

Cooperative Governance and Traditional Affairs (CoGTA) Minister, Dr Zweli Mkhize, says government is extremely concerned about the amount of Eskom debt and the culture of non-payment for municipal services.

Mkhize said Eskom debt has now escalated to about R10.7 billion, with municipalities currently owed R139 billion for municipal services.

On Thursday, Mkhize, as a chairperson of the Inter-Ministerial Task Team (IMTT) on Electricity Reticulation and Distribution, briefed the Standing Committee on Public Accounts (SCOPA) about government plans to resolve the challenge of debt owed to Eskom by municipalities for bulk electricity.

The Minister was leading a team of officials from the institutions forming part of the IMTT, which include CoGTA, the Departments of National Treasury, Energy, Public Enterprises, Water and Sanitation, the South African Local Government Association and Eskom.

He said through the Advisory Panel established by the IMTT, all parties are working closely together to find a lasting solution to various problems, some of which are beyond the concerned municipalities and Eskom.

Mkhize said some issues government is working on as part of the solution are:

  • Resolving the perceived tension between Eskom and municipalities over the allocation of areas for servicing, as both parties supply electricity to different stakeholders within a municipality, based on licensing by the National Energy Regulator of South Africa.
  • Engaging Eskom regarding their credit control policy to curb the further escalation of debt, as there are concerns from municipalities about the interest that the utility charges on the overdue amount.
  • Engaging Eskom over the tariffs they charge municipalities for bulk electricity and the interest charged on municipal debt.
  • Improving governance in municipalities to ensure there is efficiency and qualified officials to manage municipality financial functions such as revenue collection.

“All the parties are determined to find lasting solutions and municipalities have indicated that they are keen to support all the efforts and implement the decisions deriving from the process,” Mkhize said.

He said while government is looking at the constitutional and legal issues such as the jurisdiction and mandate for the supply of electricity, municipalities and Eskom are making headway in creating a conducive environment to reduce debt in the immediate term.

This includes looking into reducing penalties charged to municipalities for high electricity usage; increasing from 15 to 30 days upon which an overdue amount may attract interest; changing the model for penalising municipalities for exceeding allocated bulk electricity; and putting on hold the discontinuation of electricity supply to municipalities with debt.

Mkhize said the IMTT Advisory Panel is currently engaged with many of the issues and the report of its work is expected by the end of July 2018. –