Municipalities stand to lose income

THE South African Local Government Association (Salga) has asked for the support of Parliament to back it against Eskom over the latter’s proposal to charge consumers directly for electricity.

Bosses of Salga told the portfolio committee on cooperative governance and traditional affairs yesterday the proposal by Eskom would hit them hard in the pocket.

Municipalities stood to lose billions of rands if stripped of their powers to charge consumers for electricity. Most of them relied on electricity to generate revenue and run their operations.

Eskom chief executive Brian Molefe told Parliament in July the utility wanted to supply electricity to consumers directly to avoid non-payment of tariffs.

At present, Eskom was owed more than R5 billion by Soweto alone. Other municipalities also owed Eskom billions of rands. At the last count municipalities owed the power utility R4 billion.

Salga chief executive Xolile George told the portfolio committee they had been trying to resolve the problem for some time. He said it had caused a lot of instability since most of the municipalities relied on the revenue generated from the sale of electricity

George said the one area that remained a challenge for them was Eskom. He said they had raised the issue with Parliament during the local government indaba in July.

Earlier the department of co-operative governance told the same committee that most of the municipalities which owed Eskom money had settled their accounts.

He said there were initially 59 municipalities that owed the power utility money, and the Treasury had withheld their budgets. Of these municipalities, 58 had entered into an agreement with Eskom to settle the debt.

It has since emerged that 27 of these municipalities were defaulting because the amounts they owed exceeded their budgets.

It also emerged that some of the municipalities owed money to water boards. But the bulk of the debt was with Eskom.

Earlier, Co-operative Governance Minister Pravin Gordhan told the committee they were dealing with the problem of underspending in municipalities.

This followed concerns raised by MPs that underexpenditure on the municipal infrastructure grant was affecting development at local level.