Debt from municipalities has only grown, Eskom laments

Eskom told Fin24 on Monday that the debt crisis that it was locked in with various municipalities around the country had not improved since last year, despite the establishment of an inter-ministerial task team and a number of concessions to make repayment easier for councils.

This comes as Eyewitness News reported on Monday that the township of Soweto in Johannesburg alone owed Eskom R18bn in unpaid bills for electricity.

While Soweto falls under the Johannesburg Metropolitan Municipality in terms of local government, none of the debt that the township owes to Eskom for electricity belongs to the city.

Instead, the township buys its power directly from Eskom as a consumer area, while the City of Johannesburg manages the payments and consumption of its suburbs through the municipality’s power entity, City Power.

The utility did not provide a breakdown of each of the top ten defaulting municipalities and their debt. Rather, Eskom provided the debt owed by municipalities in relation to the provinces that the councils reside in.

One municipality in Gauteng owes Eskom R1.4bn. One municipality in Limpopo owes Eskom R402m. One municipality in the North West owes R424m. Four municipalities in Mpumalanga owe R5.1bn, while three municipalities in the Free State owe R7.3bn.

In an emailed response to questions from Fin24, Eskom spokesperson Dikatso Mothae said the debt challenge Eskom faced with municipalities had not improved in over a year.

“No improvements have been observed and the debt continues to grow. As of May 2019, the overall debt is at R21.1bn, a growth of R7.5bn since end of March 2018 (R13.6bn).

“Eskom continues to pursue various means to collect the debt including negotiating payment agreements, intermittent power supply interruptions and attaching of assets with the defaulting municipalities,” said Mothae.

The email said a total of 51 payment agreements were active with defaulting municipalities at year end, including 11 of the top 20 defaulters.

“However, of these, only six payment agreements [are] being fully honoured, including only one of the top 20 defaulting municipalities. For the period 1 April 2018 to 31 March 2019, electricity supply was interrupted to 15 municipalities,” Mothae said.

According to the email, Eskom has been interdicted from interrupting supply to 25 municipalities, including 13 of the top 20 defaulting municipalities, severely limiting the utility’s options to recover amounts due.

“Eskom also continues to participate in governmental efforts trying to assist municipalities to stabilise and pay off their debts as per the Inter-Ministerial Task Team exercise,” Mothae said.