Pay Eskom or else, says Cyril

President wants municipalities to settle debt with power utility soonest

President Cyril Ramaphosa has taken a hard line on municipal debts to Eskom.

He has instructed municipalities to pay up urgently.

In his State of the Nation Address on Thursday night, Ramaphosa said Eskom would need to take urgent steps to significantly reduce its costs. The power utility needs more revenue through affordable tariff increases, he said.

“We need to take steps to reduce municipal non-payment and confront the culture of non-payment that exists in some communities. It is imperative that all those who use electricity, over and above the free basic electricity provided, should pay for it,” Ramaphosa said.

Eskom general manager Thys Möller said municipal debt rose by 80% in the past 18 months, reaching R17bn by the end of September 2018.

Last year, Eskom threatened to shut down to several Eastern Cape municipalities whose debt was piling up.

In October, the biggest culprits, Dr Beyers Naude, Inxuba Yethemba and Great Kei municipalities owed Eskom millions.

Dr Beyers Naude, which has Graaff-Reinet as the seat of the municipality, has been threatened with blackouts as far back as 2016, when at the time it was in debt to Eskom for about R16.8m. Inxuba Yethemba faced a similar threat in 2017.

Makana municipality faced power cuts from Eskom, from December 4, due to unpaid bills. In September, Enoch Mgijima was threatened with interruptions supply over the R50m it owed.

This as Eskom debt burden stands at R420bn. Eskom is currently seeking a 15% increase on tariffs for the next three years, as well as an increase to recover losses of the 2017-18 year.

Ramaphosa said government would support Eskom’s balance sheet without burdening the fiscus with unmanageable debt.

“To ensure the credibility of the turnaround plan and avoid a similar financial crisis in a few years’ time, Eskom will need to develop a new business model. This business model needs to take into account the root causes of its current crisis and the profound international and local changes in the relative costs, and market penetration of energy resources, especially clean technologies.”

Ramaphosa also announced the unbundling of Eskom into three separate entities generation, transmission and distribution under Eskom Holdings.

He said this will help isolate costs and give responsibility to each appropriate entity.

“This will also enable Eskom to be able to raise funding for its various operations.” to its power