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Municipal debt owed to Eskom rises to R17bn

Cooperative Governance and Traditional Affairs Minister Zweli Mkhize says there’s been a similar rise in the amount that municipalities owe water boards.

FILE: Cooperative Governance and Traditional Affairs Minister Zweli Mkhize. Picture: GCIS

CAPE TOWN - Cooperative Governance and Traditional Affairs Minister Zweli Mkhize says that municipal debt owed to Eskom rose to R17 billion by the end of September.

It stood at R14.3 billion in May.

Mkhize says there’s been a similar rise in the amount that municipalities owe water boards. The minister is part of an inter-ministerial task team set up to deal with the problem.

He’s been briefing Parliament’s standing committee on public accounts and says there's been progress in finding solutions, but that a number of political decisions must still be made.

Mkhize says the massive debt owed to Eskom continues to rise.

“We have noted sadly that the debt stood at R14.3 billion around May, and then currently it has gone up to R17 billion that is just for Eskom. A similar rise is also there on the water utilities aspect.”

He says it is a national problem and not one that the power utility can solve alone.

“It has a massive amount of implications for the economy of the country.”

A technical advisory panel has made a number of recommendations, including load shedding rather than disconnecting non-paying municipalities and a moratorium on interest until principal debt is repaid.

But Mkhize says these are just proposals and the report must still come before Cabinet.

PROPOSALS TO DEAL WITH MUNICIPAL DEBT

Mkhize says a number of proposals to deal with municipalities soaring debt to Eskom are set to come before two Cabinet committees by the end of this month.

The minister has warned that municipal debt has huge implications, not only for Eskom, which is itself strapped for cash, but the economy as a whole.

Mkhize has reported significant progress on plans to deal with spiralling municipal debt, but says political decisions still need to be made.

He says a report proposing ways to restructure the debt and improve revenue collection could go before Cabinet members on 27 November, following what he called “robust engagement” with Eskom.

“Indeed, the rising debt is a matter of concern. This debt shouldn’t be increasing the way it is, therefore we should be acting on it.”

The proposals range from a review of the municipal funding model, to writing off some of the debt and reviewing the interest rates that Eskom charges.

Also proposed is introducing load-shedding, rather than disconnecting municipalities that don’t pay, and a moratorium on court actions between Eskom and local councils.

(Edited by Thapelo Lekabe)