Placing councils under care is ‘not the solution’
Placing municipalities that were battling to pay their debts to Eskom under administration was not a viable solution, Cooperative Governance and Traditional Affairs Minister Des Van Rooyen told Parliament on Wednesday.
Payment agreements would continue to be drafted and updated, he said.
When asked whether councils that continuously defaulted on their debt would be placed under administration, Van Rooyen said the challenges they faced were “structural and systemic” and that placing municipalities under administration was an overly simplistic view.
“The problems we are dealing with are structural and systemic. The introduction of admin is not the solution.
“The problems go back to financial liability and the use of a land base. Intervening without understanding is not helpful,” said Van Rooyen.
The Department of Public Enterprises, the Treasury and the Department of Co-operative Governance and Traditional Affairs had formed a team to help tackle the councils’ challenges, the minister said.
After introducing a reduction on the interest of debt owed and adjusting the payment deadline, the Department of Co-operative Governance and Traditional Affairs was confident that it had made progress in handling the problem.
“Teams have helped change things to make it easier to pay Eskom, reducing the interest rate charge on overdue accounts.… [Certain] rules need change because they keep councils in eternal debt. The Treasury must assist in determining amounts to establish what can be collected,” he said.
Replying to a question from DA MP Kevin Mileham in the National Assembly, the minister said the top 60 defaulting councils would be studied by the intervening departments to assess their ability to honour payment agreements.
Mileham said some councils were being “throttled” with the threat of power interruptions and others were facing a real risk of a cut-off in December.
He challenged Van Rooyen to agree that the top defaulters would never be able to pay back the debt.