Free State councils are top Eskom debtors

Municipalities in the Free State, Mpumalanga and the North West, which are known as premier league provinces, hold the bulk of Eskom debt, owed as a result of nonpayment for the provision of electricity.

About 42% of Eskom’s revenue comes from municipalities and the power utility told Business Day that no debt writeoffs were on the cards.

Municipalities in the Free State owe R4.4bn, those in Mpumalanga have R2.3bn in outstanding payments and councils in the North West have R843m in Eskom debt.

In total, municipalities in SA owe the power utility about R10bn. Eskom has come up with a list of the top 20 defaulting municipalities, the majority of which are in the Free State. Maluti-a-Phofung, Matjhabeng, Ngwathe, Nala, Moqhaka, Dihlabeng and Nketoana are among the worst defaulters.

“Eskom has signed payment arrangements, supported by council resolutions, with the defaulting municipalities. Some of these municipalities are now paying, but others are battling to honour their payment arrangements. About 42% of Eskom’s revenue comes from municipalities. No debt write-offs are on the cards,” said Eskom spokesman Khulu Phasiwe.

South African Local Government Association spokesman Sivuyile Mbambato said following talks between the association and Eskom, the parties had made new commitments.

“These include the rationalisation of municipal tariffs to reduce tariff options from 11 to three, decreasing the interest charged on overdue balances from prime plus 5% to prime plus 2.5%, changing the payment period on municipal bulk accounts from 15 days to 30 days and changing Eskom’s payment allocation policy to allocate payments to capital debts first before allocating payments to interest charged.”