Municipal debt spiralling out of control

Eskom board chairperson Jabu Mabuza has told Parliament that municipalities owed the power utility R13.8 billion at the end of April.

FILE: Picture: EWN.

CAPE TOWN - Treasury Director-General Dondo Mogajane has sounded the alarm over the mounting billions that municipalities owe Eskom, saying it could affect the economy.

Eskom board chairperson Jabu Mabuza has told Parliament that municipalities owed the power utility R13.8 billion at the end of April, but that this figure is expected to grow and is a threat to Eskom’s sustainability.

The billions owed to Eskom form only part of the municipal debt. Figures from the Department of Cooperative Governance and Traditional Affairs (Cogta) show that municipalities have racked up R7.3 billion in debt for water and owe other creditors R17.7 billion, making a total of R25 billion.

Municipal debt is spiralling out of control. The R9.4 billion owed to Eskom in March 2017 is now heading for the R14 billion mark, an increase of 48% and that’s just for electricity.

Mogajane says the implications reach beyond Eskom’s financial situation.

“… Because Eskom’s sustainability and the exposure to the economy that the power utility has becomes a challenge.”

Parliament’s Standing Committee on Public Accounts (Scopa) has been told a key problem is municipalities tabling unfunded budgets, planning to spend money they don’t have.

“We’re saying that in most municipalities there is weak political and administrative leadership, ineffective councils in some cases, governance structures not in place, that contribute to the challenges as we see them,” Mogajane said.

Eskom says efforts to collect money owing – including cutting the power supply – are not working. Scopa now wants to hear from the team of ministers tasked to deal with the crisis.

Scopa chairperson Themba Godi says the committee will also call the top 10 defaulting municipalities that are responsible for most of the billions owed to Eskom.

TOP 10 MUNICIPALITIES THAT OWE ESKOM

Eskom has identified the top 10 municipalities that together owe the power utility R9.5 billion. Four are in Mpumalanga, three are in the Free State, two are in North West and one is in Gauteng.

They are:

Maluti A Phofung (Free State) - owes Eskom R2.8 billion

Matjhabeng (Free State) - owes R1.8 billion

eMalahleni (Mpumalanga) - owes R1.6 billion

Ngwathe (Free State) - owes R936 million

Emfuleni (Gauteng) - owes R606 million

Govan Mbeki (Mpumalanga) - owes R517 million

Lekwa (Mpumalanga) - owes R491 million

Thaba Chweu (Mpumalanga) - owes R431 million

Ditsobotla (including Lichtenburg) (North West) - owes R293 million

Naledi (North West) - owes R280 million

According to Cogta 55 payment arrangements had been signed by municipalities, but only 32% of them are being honoured.

(Edited by Zamangwane Shange)