Municipalities’ R78 billion Eskom debt

The R78 billion debt owed to Eskom by municipalities must be urgently addressed to protect the ability of the power utility to fulfil its mandate.

This is according to Minister of Electricity and Energy, Dr Kgosientsho Ramokgop,a who addressed the media on Monday.

“Collectively, municipalities are owing Eskom R78 billion and…a lot of this is irrecoverable. There’s no possibility under the sun that we are going to collect that R78 billion. It’s important that we resolve this picture.

“This picture presents problems for Eskom. Eskom needs this money for it to be able to reinvest back into its own infrastructure. Municipalities have to pay that money…but on an objective ground, they simply don’t have the means to be able to pay,” he said at the briefing held in Pretoria.

Ramokgopa said the current trajectory of the debt owed to Eskom poses a threat to the existence of the power utility in the future.

“To give you the magnitude of the problem, if we don’t resolve this problem, our projection is that at the current rate, by 2050, Eskom will be owed R3.1 trillion. Eskom will collapse. Generation capacity is going to be compromised. So, it’s important that we resolve this question.

“This is the most urgent task that is confronting us. It is municipality related but we can’t fold our arms, we need to help them from a technical point of view.”

He emphasised that continued non-payment is affecting Eskom’s ability to address distribution infrastructure needs – leading to the implementation of load reduction.

Load reduction is implemented in areas when the demand is higher than the infrastructure is able to handle.

“In the solution, we must protect the interests of Eskom as a going concern, ensure that municipalities are able to collect [revenue] but also protect the interests of the user. Because when that distribution infrastructure fails that is providing electricity to 50 houses, there’ll be 10 to 20 houses that have been paying diligently but they are collateral damage.

“The biggest victims of all of that is the end consumer and, by definition, is the South African economy,” he said.

The Minister said the department, together with municipal leaders will address the challenge of electricity affordability and access to allow municipalities to be able to collect revenue.

“It is important that we must review electricity tariff models to enhance affordability and expand access. Everyone must have access to electricity and once they have access…make sure that they can afford it. That’s something that is going to receive our attention.

“Distribution is our albatross…it’s on a mode of self-destruction and the casualties are the poor. They are the ones that are subjected to conditions of load reduction in the main and even those who are diligent payers are subjected to load reduction.

“This can’t continue any further. It’s important that we arrest it so that we are able to ensure that the country is able to achieve its developmental objectives,” he said.