Municipalities making progress to settle Eskom debt

Wednesday, August 30, 2017

Cooperative Governance and Traditional Affairs Minister Des Van Rooyen says several municipalities were complying with the arrangements made with Eskom to settle their electricity debt.

The Minister said this when he briefed the media after President Jacob Zuma convened a meeting with political office bearers from all three spheres of government – Ministers, Premiers and Mayors – at Tuynhuys in Cape Town on Tuesday.

The Presidential Coordination Council sits every quarter to track issues related to service delivery. 

He said the debt owed by municipalities was highlighted in a presentation made by the South African Local Government Association President Councillor Parks Tau.

“We are speaking here to 48 municipalities that are being affected, and 20 of these municipalities have been showing progress in terms of the repayment arrangements that were made before. We are continuing to engage with the Department of Public Enterprises and the affected municipalities and provinces to make sure that we don’t have a situation where municipalities are denied such a basic service. Those engagements are continuing and we think that with the spirit that prevailed in the Inter-Ministerial Task Team, we will be able to avert any situation where municipalities or business is denied access to this basic service,” he said.

According to figures provided by the Presidency after the PCC meeting, 58 municipalities owe the power utility R7.5 billion.

Minister Van Rooyen said the Inter-Ministerial Task Team on Eskom has since realised that smaller municipalities were the ones mostly struggling with paying their debt.

“What we have realised is that there is a positive correlation between the economic status of municipalities and the rate at which they are able to pay their creditors, including Eskom. So it is very clear that the lack of economic base in many municipalities is one of the key contributing factors to some of the municipalities not being able to pay and as a result we have agreed that there is a need for government to review the current formula on the equitable share allocation,” he said.

Equitable share to municipalities discussed

Meanwhile, the Minister said Tuesday’s meeting also deliberated on a proposal to review the current equitable share formula amid concerns that not enough resources were being allocated to the local government.

“Also the other item that was entertained was how do we deal with the adequacy of funding to municipalities that is the adequacy of the allocation of the equitable share. We think the way the PCC resolved on these issues, we are registering a lot of progress on those three areas,” he said.

“…some of the issues that have been raised by Eskom are being looked at by the Eskom Board quite positively where there was an issue that was raised in the Inter-Ministerial Task Team around the credit policy cycle of Eskom, which was not accommodating the credit control policy of municipalities. Eskom usually effects its credit control policy after 15 days but municipalities do that every 30 days, so Eskom has agreed that it is going to align that with their credit policy.

“The other issue that was also discussed was how do we determine the authority of providing electricity in a given area because in some cases, the National Energy Regulator (Nersa) offers Eskom to provide electricity in certain areas, but in some cases, municipalities are an executive authority. So these are the issues that enjoyed a lot of discussion and we think this is an issue that will be resolved by the end of October.”

The Minister said, meanwhile, that three provinces - North West, Free State and the Western Cape made presentations on their implementation of government’s Back-to-Basics programme. –