Cooperative Governance and Traditional Affairs Minister Dr Zweli Mkhize on Thursday briefed the Standing Committee on Public Accounts about government’s plans to resolve the challenge of debt owed by municipalities to State-owned power utility Eskom.
The debt incurred by municipalities is for bulk electricity and has accumulated to more than R10-billion, while R139-billion is owed to municipalities by households for municipal services.
Mkhize, as chairperson of the Inter-Ministerial Task Team (IMTT) on electricity reticulation and distribution, said government was concerned about the amount of Eskom debt, as well as the culture of nonpayment for municipal services.
The IMTT is working on solutions to resolve the perceived tension between Eskom and municipalities over the allocation of areas to be serviced as both parties supply electricity to different stakeholders within a municipality, based on licensing by the National Energy Regulator of South Africa.
The solutions further involve engaging Eskom regarding its credit control policy to curb the further escalation of the debt, as there are concerns from municipalities about the interest that the utility charges on the overdue amount; engaging Eskom over the tariffs it charges municipalities for bulk electricity and the interest charged on municipal debt; and improving governance in municipalities to ensure there is efficiency and that qualified officials manage financial functions such as revenue collection.
“While government is looking at the constitutional and legal issues such as the issue of jurisdiction and mandate for the supply of electricity, municipalities and Eskom are making headway in creating a conducive environment to reduce debt in the immediate term.”
These relate to reducing penalties charged to municipalities for high electricity use, an increase from 15 to 30 days upon which an overdue amount may attract interest, changing the model for penalising municipalities for exceeding the allocated bulk electricity, and putting on hold the discontinuation of electricity supply to municipalities with debt.
The Minister said the IMTT advisory panel is currently engaged with many of the issues and the report of its work is expected by the end of July.
Meanwhile, some of the top defaulters of municipal service debt include the Matjhabeng and Ngwathe local municipalities, in the Free State; the Ditsobotla and Naledi municipalities, in the North West; and the eMalahleni, Govan Mbeki and Lekwa municipalities, in Mpumalanga.
Municipalities claim that some of the causes of the debt owed to them (for municipal services) include illegal connections in communities, a high unemployment rate, ageing infrastructure and debt collectors who are overcharging municipalities.