Debtors keep­ing Eskom on a string

The Mercury - - NEWS - Mayibongwe Maqhina

THE fi­nan­cial sus­tain­abil­ity of Eskom would re­main dif­fi­cult for as long as the power util­ity was un­able to se­cure its debts, the util­ity’s board’s chair­man, Jabu Mabuza, said yes­ter­day.

Brief­ing the stand­ing com­mit­tee on pub­lic ac­counts (Scopa), Mabuza said mu­nic­i­pal debt re­mained a press­ing chal­lenge for Eskom, which faced se­ri­ous fi­nan­cial chal­lenges.

“The amount owed by mu­nic­i­pal­i­ties con­tin­ues to grow, with notable in­creases from R9.5 bil­lion to R13.5bn, a 42% es­ca­la­tion be­tween 2017 and 2018. This is of se­ri­ous con­cern as it chal­lenges the sus­tain­abil­ity of Eskom,” he said.

Mabuza made the com­ments when he ap­peared be­fore Scopa along with his col­leagues from the SA Lo­cal Govern­ment As­so­ci­a­tion (Salga), the Na­tional Trea­sury and the Depart­ment of Co-op­er­a­tive Gov­er­nance and Tra­di­tional Af­fairs.

The com­mit­tee wanted an­swers from the author­i­ties on what was be­ing done to solve the grow­ing debt owed by mu­nic­i­pal­i­ties, with Free State mu­nic­i­pal­i­ties ow­ing R6.5bn and Mpumalanga R3.2bn alone.

Mabuza said in­vestors were con­cerned that the in­creas­ing mu­nic­i­pal debt would make it dif­fi­cult for Eskom to ser­vice its own debt.

He said the ques­tion was be­ing asked, if Eskom could not col­lect its debt, how would it pay its cred­i­tors?

“This re­duces ap­petite for Eskom bonds,” Mabuza said.

He told MPs that the debt stood at R13.8bn with in­ter­est at the end of last month.

“The col­lec­tion of mu­nic­i­pal debt re­quires an ur­gent shift in ap­proach,” Mabuza said. “We need to face the harsh re­al­ity that the fi­nan­cial sus­tain­abil­ity of Eskom will re­main dif­fi­cult for as long as we are un­able to se­cure our debt. We have com­pro­mised our credit strat­egy thus far, and con­tin­u­ing to do so will have se­ri­ous con­se­quences,” he said.

Ayanda Noah, Eskom’s group ex­ec­u­tive for cus­tomer ser­vices, ad­mit­ted that mu­nic­i­pal debt had spi­ralled from last year.

“In one year we had an in­crease of R4.1bn,” Noah said. She added that the sit­u­a­tion was not im­prov­ing as the debt in­creased R320m in March.

Slapped

Eskom was be­ing slapped with court ac­tions by or­gan­ised busi­ness and com­mu­ni­ties, and some mu­nic­i­pal­i­ties were not pay­ing al­to­gether de­spite mak­ing ar­range­ments, Noah said.

Salga deputy pres­i­dent Seben­zile Ngan­ge­lizwe said they had ad­vised in the dis­pute be­tween Salga and Eskom that the lat­ter sign a ser­vice de­liv­ery agree­ment with coun­cils.

He said Eskom’s busi­ness model dis­ad­van­taged mu­nic­i­pal­i­ties with ab­nor­mal rates, ab­nor­mal no­tice for de­mand on penal­ties and billing cy­cles.

How­ever, Trea­sury di­rec­tor-gen­eral Dondo Mo­ga­jane took a swipe at Salga for rais­ing pol­icy-re­lated is­sues in­stead of plans for mu­nic­i­pal­i­ties to pay up.

“I’m equally con­cerned about Eskom sus­tain­abil­ity. If mu­nic­i­pal­i­ties don’t pay, the Na­tional Trea­sury has a big­ger prob­lem. Eskom’s sus­tain­abil­ity and ex­po­sure be­comes a chal­lenge,” Mo­ga­jane said.

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