Eskom rules out cancelling the accumulated municipal debt

ESKOM has ruled out cancelling the ballooning municipal debt, saying the move has not worked in the past.

Eskom has been battling against the debt as a number of municipalities have defaulted in their payments. This has prompted the power utility to cut off a number of the municipalities in order to recoup the money.

Total municipal overdue debt at the end of August was more than R11.2 billion. The debt was up by R171 million, compared to July. There are 68 municipalities that are overdue by more than R10m, according to Eskom.

As the debt continues to grow, the South African Local Government Association (Salga) – a public entity that represents the interests of local government – has previously called for the debt to be written off. The organisation has also asked Eskom to review its debt control policy.

Eskom spokesperson, Khulu Phasiwe, yesterday said that cancelling the debt was not on the table. “This is primarily because we have done it in the past and have not seen the benefits.

“In 2002, we wrote off approximately R1.4bn for Soweto. The debt for Soweto now stands at R7bn. So clearly, writing off the debt did not work,” said Phasiwe.

Eskom executive for customer services, Ayanda Noah yesterday told Parliament that municipal debt had increased to unsustainable levels, requiring drastic intervention.

Noah said: “Intervention from the National Treasury and other national departments is required to stop the bleeding and to assist Eskom’s financial situation and help the municipalities to become sustainable.”