Fin24.com | Municipal debt to Eskom grows by over R1bn in a month

Overdue debt owed to Eskom by municipalities increased by some R1.2bn in September to R26.4bn by the end of October, Parliament‘s Standing Committee on Public Accounts heard from the inter-ministerial task team aimed at resolving the debt owed to the power utility. 

The meeting took place on Tuesday morning in Parliament, along with the top 20 debtors who account for 79% of the total debt. Of these, the top 20 municipalities who owe Eskom money account for 67% of the overall council debt.

Since the inter-ministerial task team was established in 2017, it has met with Eskom at least 40 times, but the debt to Eskom has grown by R16bn.

Scopa, for its part, has decried the lack of progress in reducing the debt owed to the already troubled utility. The last time the committee met to discuss the matter, none of the ministers in the task team showed up. This prompted Scopa to admonish the ministers, especially Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma, who chairs the task team.

Executive manager at the Department of Cooperative Governance and Traditional Affairs (Cogta) Kevin Naidoo told Scopa that out of a total of 48 valid payment arrangements that Eskom had with municipalities, only 11 were being fully honoured as of October.

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Growing debt, fewer payments

“The top 20 payment levels have dropped from a peak of 91% in March 2016 to 31.3% in October 2019, with virtually no payment towards the current accounts over the last 7 months,” said Naidoo.

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Among the top defaulting debtors, Maluti a Phofung Local Municipality in the Free State owes a total debt of R4.5bn, R4.4bn of which is overdue.

Emalahleni Local Municipality in Mpumalanga owes a total debt of R3.3bn, R3.1bn of which is overdue. Matjhabeng Local Municipality‘s total debt stands a tR2.7bn, of which R2.6bn is overdue.

Eskom chair Jabu Mabuza said despite having over 40 meetings with the inter-ministerial task team, the debt has only grown, meaning that leadership “either misdiagnosed the problems or mis-prescribed the solution”.

“If one looks at this trend, by the end of the financial year, this debt will be at R30bn and this time next year, the debt would be at R35bn. That‘s where the direction is heading,” said Mabuza.

Scopa chair Mkhuleko Hlengwa said he and the rest of the committee members were growing weary of meeting over the same issue, only to find with each meeting that the debt crisis had gotten worse than it was before.

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