‘Don’t al­low Eskom to col­lect fees’

Mu­nic­i­pal­i­ties will col­lapse if they can’t levy power charges – Mkhize

Pretoria News Weekend - - NEWS - SIYABONGA MKHWANAZI

CO-OP­ER­A­TIVE Gov­er­nance Min­is­ter Zweli Mkhize has warned against strip­ping mu­nic­i­pal­i­ties of their pow­ers to di­rectly charge for elec­tric­ity as this would lead to their to­tal col­lapse.

Mu­nic­i­pal­i­ties gen­er­ate more than 63% of their rev­enue from elec­tric­ity sup­ply to house­holds and busi­nesses across the coun­try.

Eskom and mu­nic­i­pal­i­ties sup­ply elec­tric­ity in dif­fer­ent parts of the coun­try.

How­ever, Eskom has in the re­cent times ex­pe­ri­enced prob­lems of bil­lions owed to it by sev­eral mu­nic­i­pal­i­ties.

The power util­ity is owed more than R27 bil­lion, and the over­due amount is R14bn.

Some of the MPs this week urged Mkhize to get Eskom to sup­ply elec­tric­ity di­rectly to house­holds and busi­nesses and col­lect the money.

This would lead to the re­duc­tion of the debt due to Eskom by mu­nic­i­pal­i­ties.

But Mkhize said this idea would leave the mu­nic­i­pal­i­ties bat­tling to stay afloat.

“The real is­sue is that mu­nic­i­pal­i­ties use elec­tric­ity as rev­enue. If you look at the rev­enue of mu­nic­i­pal­i­ties it is 63%.

“If you say Eskom must col­lect di­rectly and not in­volve mu­nic­i­pal­i­ties it will shut down mu­nic­i­pal­i­ties,” said Mkhize.

“We have seen col­lec­tion in pre­paid me­ters by mu­nic­i­pal­i­ties is 99%. But in con­ven­tional me­ters by Eskom it is be­tween 38% and 40%,” said Mkhize.

For­mer Eskom boss Brian Molefe a few years ago pro­posed in Par­lia­ment that the power util­ity must di­rectly charge house­holds and busi­nesses elec­tric­ity to re­duce the mu­nic­i­pal debt.

Molefe had ar­gued it did not make sense to have mu­nic­i­pal­i­ties sup­ply­ing elec­tric­ity to house­holds and busi­nesses, when Eskom can do that func­tion and in­crease its col­lec­tion rate.

At the time, Molefe said the idea had not been fully dis­cussed at Eskom and raised with govern­ment.

When Pravin Gord­han was Co-op­er­a­tive Gov­er­nance Min­is­ter, be­tween 2014 and 2015, he warned that most of the mu­nic­i­pal­i­ties were not fi­nan­cially vi­able be­cause they didn’t have a rev­enue base.

They were strug­gling to gen­er­ate their own rev­enue lead­ing to the merger of some of the mu­nic­i­pal­i­ties.

Mkhize has also called for mu­nic­i­pal­i­ties to gen­er­ate their rev­enue to stay fi­nan­cially sound. Those with strong rev­enue streams must in­crease their rev­enue.

But Mkhize shot down the idea by some of the MPs of strip­ping mu­nic­i­pal­i­ties of their pow­ers to sup­ply elec­tric­ity and gen­er­ate rev­enue.

Mu­nic­i­pal­i­ties are in turn owed more than R139bn by house­holds, busi­nesses and govern­ment depart­ments.

Na­tional Trea­sury has said in the past most of the debt was not re­cov­er­able as it was his­tor­i­cal.

The debt has been in­creas­ing steadily from R49bn in 2010 to a stag­ger­ing R139bn this year.

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