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Eskom: Municipal debt has reached unsustainable level

Eskom is owed about R30 billion by municipalities, with Soweto responsible for about R14 billion of that.

FILE: Acting Eskom CEO Phakamani Hadebe (left) at the announcement of the company's interim results on 30 January 2018. Picture: Gia Nicolaides/EWN

CAPE TOWN - Eskom says that municipal debt has now reached levels that are threatening the utility’s sustainability.

Eskom is owed about R30 billion by municipalities, with Soweto responsible for about R14 billion of that.

Efforts to collect the billions owed, including scheduled power cuts in some municipalities, are having little effect, a top level Eskom delegation told Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday night.

New acting CEO Phakamani Hadebe says that the problem is too big for Eskom to solve on its own.

"This is beyond Eskom. The different organs of the state and government have to deal with this."

Hadebe says that Eskom could face a further ratings downgrade, but that a bigger risk is that investors who’ve underwritten the utility’s R367 billion debt will refuse to extend this, while Eskom needs to borrow an additional R72 billion by June.

"The situation, honourable members is dire and we can’t hide that. And in fact it has reached an unsustainable level."

Hadebe says that municipal debt has skyrocketed from about R5,5bn in September 2015 to R13,5bn at the end of January – an increase of almost 140% and that excludes the R14 billion owed by Soweto.

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