Eskom: Interventions to recover municipal debt not working

The utility has told Parliament’s Standing Committee on Public Accounts that soaring municipal debt now stands at about R30 billion and is putting Eskom’s sustainability at risk.

FILE: Eskom's Megawatt Park offices in Sunninghill. Picture: EWN

CAPE TOWN – Eskom says that cutting power to defaulting municipalities to force them to pay down their debt doesn’t seem to be working, while Members of Parliament (MPs) are worried this could put local businesses and jobs on the line.

The utility has told Parliament’s Standing Committee on Public Accounts that soaring municipal debt now stands at about R30 billion and is putting Eskom’s sustainability at risk.

New acting CEO Phakamani Hadebe says the problem cannot be solved by Eskom alone and that the government has to step in.

Hadebe says if municipal debt continues to spiral Eskom could face a further ratings downgrade and investors who’ve underwritten the utility’s debt of R367 billion may turn off the taps.

He says Eskom needs to raise a further R72 billion on the markets by June.

“Yes we have some other challenges, our revenue is decreasing, sakes volumes have dropped by 1.9%. But this debt could be that big shove that breaks the camel’s back.”

Group executive for customer services Ayanda Noah says that the utility has made a number of concessions to defaulting municipalities.

“The debt has just skyrocketed… our interventions of interruptions don’t seem to be bringing any results.”

Eskom says that scheduled power cuts are the only tool available to it to compel municipalities to pay up but MPs are worried about the impact on small businesses and jobs.