Mkhize to table plan for Eskom payments

The establishment of an independent revenue collection agency and early interventions against defaulters by the national and provincial government are some of the proposals co-operative governance & traditional affairs minister Zweli Mkhize will present to the cabinet to resolve the problem of municipalities that are defaulting on Eskom payments.

Eskom said overdue debt from municipalities reached R17bn at the end of September, rising 25% in the past six months. It has resorted to cutting off entire towns to induce payment, forcing local business groups to go to court to keep the lights on.

In an interview on Thursday, Mkhize said the proposals are based on five principles: the implementation of prepayment systems; improved collection; swift reaction by his department and the Treasury as soon as a default occurs; dealing with the broader problem of dysfunctional municipalities; and a campaign to encourage responsible payment by consumers.

As well as the debt owed by municipalities to Eskom, the company is also owed billions by consumers in township areas, where it supplies households directly. Soweto’s debt to Eskom alone is R16.8bn, Eskom said on Wednesday.

Mkhize, whose ministry is in charge of local governments, said it is premature to go into detail about the proposals because they are still under discussion by the cabinet, but the appointment of an independent revenue collection agency in cases of municipalities being unable to collect revenue owing to Eskom is on the table.

The biggest defaulter is the Maluti-A-Phofung municipality, which includes Harrismith and Phuthaditjhaba. It owes Eskom more than R3bn. Revenue collection has collapsed and businesses recently went to court to stop Eskom disrupting the electricity supply. The municipality was placed under administration in February.

An out-of-court settlement led to the establishment of an oversight committee, on which business as well the government is represented. The committee held its first meeting in Pretoria on Thursday.

“There is a revenue collection and recovery plan in place,” Mkhize said.

The agreement for Maluti-APhofung allows business to return to court should the recovery fail, he said.

Under the arrangement facilitated by various court agreements, businesses are paying Eskom directly for electricity, by-passing the municipality.

Eskom and the government are negotiating whether it will be a permanent arrangement.