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Municipalities owe Eskom billions

Councils across South Africa owe the power utility R2,9 billion as of October 2013.

FILE: Eskom's Arnot Power Station in Mpumalanga. Picture: Supplied.

CAPE TOWN - Municipalities owe Eskom nearly R3 billion in outstanding bills for electricity, Finance Director Tsholofelo Molefe said on Tuesday.

The utility's acting Chief Executive Officer (CEO) Collin Matjila, Molefe and other top officials briefed Parliament's Portfolio Committees on Energy and Public Enterprises in Cape Town.

In September 2013, municipalities owed Eskom R1,5 billion, but the amount spiked to R2,9 billion in October.

Molefe says it's affecting the company's bottom line.

"Because Eskom is dealing with financial challenges, we have no choice but to be more assertive to protect Eskom. We run the risk of not moving forward."

The director says municipalities in the Free State, Mpumalanga and North West are the worst offenders.

Molefe says disconnecting municipalities will be the last resort.

Matjila meanwhile says a cost-cutting programme at the power utility could trim its operating budget by more than R60 billion.

The CEO says the cuts will ensure Eskom's sustainability.

Matjila says Eskom's balance sheet needs to be strengthened in order to acquire capital to fund its build programme.

He says future load-shedding is still on the cards.

ESKOM VITAL FOR RATINGS

Public Enterprises Minister Lynne Brown says South Africa's economic growth depends on Eskom's success as a company.

She says international ratings agencies will be looking at Eskom's financial position when deciding whether to upgrade or downgrade the country's credit worthiness in September.

The minister says Eskom and the government are working on a plan for the power utility's sustainability.

Brown also says she'll name a permanent CEO to replace Brian Dames.

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