Blame ANC for municipalities’ debt woes

For several years, municipalities have increasingly felt the pressure of Eskom’s heavy hand — from the perspective of continuous electricity tariff increases and in terms of the threat (and action) of “throttling” electricity supply at peak times to municipalities that are struggling to pay years of debt arrears.

At a meeting in Parliament more than a year ago, the South African Local Government Association (Salga) highlighted several concerns it felt would tackle the problem.

These included the exorbitant interest rates charged by Eskom (prime plus 5% at the time) and the misalignment of the billing cycles (Eskom charges interest 15 days after invoice, while municipalities work on a 30day cycle).

Both matters were dealt with, although it took nearly a year to implement. But this problem remains as municipalities cannot afford to repay their debt and, for the most part, fail to implement austerity measures to cut wasteful expenditure.

Yet Salga cites this as a major success in its annual report to Parliament.

In September, Eskom issued notices of intent to throttle supply to 23 municipalities that had failed to adhere to the repayment agreements they had concluded with Eskom in January.

It must be pointed out that these agreements were extremely onerous and, in most cases, the municipalities had been coerced into agreeing to them. Subsequently, some have reached new agreements, but again, these are unlikely to be affordable and now a new batch of municipalities are under threat.

Many of these municipalities have debt outstanding for three or more years. The worst offender is Emalahleni (Witbank) in Mpumalanga, which owes Eskom more than R1.1bn. Smaller municipalities are equally at risk: Siyancuma in the Northern Cape, for example, which owes Eskom R101m, is struggling to supply water to residents because its pumps are cut off.

Some businesses and clinics face closure due to the cost of keeping a generator running for five to seven hours a day. The reality is that their budgets are underfunded and largely reliant on grants from the national fiscus.

The cause of the financial crisis in municipalities can be laid at the door of the ANC. Apart from its record of financial mismanagement, the deployment of underqualified cadres and widespread corruption, have all contributed to the failure of municipalities.

At the start of then finance minister Pravin Gordhan’s much vaunted Back to Basics programme in 2014, about 86 municipalities were identified as dysfunctional. That dysfunctionality relates to the ability of those municipalities to generate and collect revenue, manage their expenditure and procurement and deliver basic services. But equally, it points to their inability to appoint senior staff and, more importantly, staff of quality. Three years later, the number of dysfunctional municipalities has not changed significantly.

So where is the national and provincial government in all this? Section 139(5) of the Constitution places an obligation on the provincial cabinet to impose a recovery plan aimed at securing the municipality’s ability to meet its obligations to provide basic services or its financial commitments. And where a province fails to act, section 139(7) imposes the same responsibility on the Cabinet at national level. Have they done so? So far, there seems to be little evidence of this.

The provincial MECs responsible for co-operative governance have done very little to assist municipalities. Interventions have been few and far between.

Co-operative Governance Minister Des van Rooyen heads the interministerial task team dealing with the crisis. He has attended only two portfolio committee meetings in 2017. Even the meeting to discuss the Eskom debt at municipalities was held in his absence.

His responses to queries and correspondence have been noncommunicative and lacklustre, demonstrating a distinct proclivity to shrug off such pertinent issues.

Van Rooyen, in a written response, indicated that he would ensure close monitoring of the interventions and compliance — and yet the actual implementation thereof has been distinctly lacking, leaving municipalities and consumers to fend for themselves.

Our legislation has created the municipal financial recovery service, housed at the Treasury, to assist municipalities in financial distress. But the fact of the matter is that, if it has been utilised at all, it has been completely ineffective in turning the financial situation of these municipalities around.

The lack of intervention by the minister and his MECs at provincial level has resulted in consumers who pay their bills regularly being cut off to penalise municipalities that fail to pay their bulk bill to Eskom. While this is within the legal framework, it can hardly be considered fair. It is time for the minister to take his head out of the sand. The people of SA cannot be made to suffer for the ineffectiveness of the ANC and its cadres.

ESKOM ISSUED NOTICES OF INTENT TO THROTTLE SUPPLY TO 23 MUNICIPALITIES THAT FAILED TO ADHERE TO THE REPAYMENT AGREEMENTS