Municipal debt to Eskom up to R17bn

As minister Zweli Mkhize attempts to broker a cabinet-sanctioned deal to break the impasse, the amount owed to Eskom by defaulting municipalities has ballooned to R17bn at the end of September.

Mkhize, who heads the cooperative governance and traditional affairs ministry, appeared before parliament’s standing committee on public accounts on Tuesday along with an advisory panel he set up to report on the stand-off, which has seen Eskom cutting off the electricity supply to entire towns, prompting businesses to go to court to have power restored.

Municipal debt is growing exponentially. In March it stood at R13.57bn.

The debt crisis has exacerbated Eskom’s weak financial position as it struggles to regain a sustainable footing.

While Mkhize stressed that Eskom was co-operating fully with the process, advice from the advisory panel indicated the matter would not be resolved in a way that satisfied Eskom.

Mkhize plans to table the recommendations in cabinet committees at the end of

November, when he hopes a final decision will be reached.

A key point of contention is whether municipalities have the sole right to reticulate electricity or if Eskom may also reticulate electricity within municipal boundaries, which would allow the utility to supply customers directly. On the basis of legal opinions and representations from all the parties, panel chair Daniel Plaatjies told the committee that the panel had concluded that “the powers, functions and competencies to reticulate electricity within municipal areas fall exclusively, and in terms of the constitution, on municipalities”. If Eskom intends to reticulate electricity within municipal boundaries it must conclude a service delivery agreement with that municipality.

Eskom disagrees with this legal interpretation, arguing that the National Energy Regulator of SA (Nersa) is able to issue licences without reference to municipal legislation.

Mkhize said that while the intention several months ago had been for the parties to approach the courts to get a declaratory order on this, the discussions had moved the parties well beyond this point.

“We’ve made significant progress. For two years this discussion has been going on in government with no progress. This is not a comfortable solution for everyone but we need to move on and stop these worries about electricity disruptions,” he said. “Municipal debt is not an Eskom problem, it is a national issue. It has huge implications for the economy. We want to give support to Eskom on how to deal with this.”

For these reasons, he said, he had also asked the panel to deal with the restructuring of the debt; the billing of municipalities by Eskom; the need to build a culture of payment among consumers; and a review of the licensing process by Nersa.

While there was agreement on the need to install prepaid meters, how to restructure the debt had not been resolved.

R13.57bn

municipal debt at the end of March