Jul 26, 2012
Municipalities inadequate – officialBack
Eskom|Roads|System|Water|Electricity|Electricity Distribution|Electricity Distributors|Energy|Energy Distribution Industry|Unpaid Electricity Bills|Ongama Mhalawe|Terence Nombembe|Thembani Bukula|Water
There was no clear strategy to solve the problem, co-operative governance deputy director Ongama Mhalawe told Parliament's portfolio committees on energy and co-operative governance.
He said municipalities were plagued by a lack of technical capacity, funding gaps, and poor revenue management.
Evidence of this was a collective municipal debt of R76 billion, of which R12.7 billion consisted of unpaid electricity bills.
Mhalawe was speaking on the first day of public hearings on energy distribution industry (EDI) problems.
He said: "If we don't deal with the issues, including governance, we won't be able to deal with electricity distribution."
According to figures from the energy department, municipalities provide electricity to roughly 54 percent of the country's users and had an asset maintenance backlog of R27.4 billion in 2008. The figure has been increasing by R2.5 billion a year and now stood at R35 billion.
National Energy Regulator of SA (Nersa) member Thembani Bukula said municipal distribution chain woes, including licensing breaches, were a function of wider mismanagement.
The regulator proposed ring-fencing funding for asset maintenance.
"They're not very good at building roads or supplying water either," Bukula said.
"There is no reason in principle why municipalities should not distribute electricity, but in the current situation it is not ideal."
Auditor General Terence Nombembe's annual report last week revealed that only 13 of the country's 343 municipalities received clean audits in the past financial year.
Nombembe also faulted municipalities for R11 billion in unauthorised and irregular expenditure.
Eskom's executive head of distribution Ayanda Noah said it was lamentable that wasted state funds could have paid for a third of the maintenance backlog.
"It shows that the money to deal with the backlog is in the system."
She said Eskom believed direct transfers to local government to fix the problem were "a last resort measure only".
Noah called for a "pragmatic approach" to transforming the distribution industry, and commented that after two decades in which dominant thinking demanded it be completely overhauled, this had failed to happen.
"History probably tells us that we don't have the appetite for large-scale restructuring," she concluded.
Presenters made the point that stripping municipalities of their distribution capacity was not a viable option, as proven by the shelving of the regional electricity distributors programme.
It was halted because municipalities would lose a vital revenue stream, often used to cross-subside other services.
Academics from the Cape Peninsula University of Technology said it appeared the energy department was languishing in "analysis mode" when it needed to tackle the problem.
They proposed that Nersa administer the necessary funds for asset maintenance as part of its licensing functions.
The hearings continue until Friday.
Edited by: SapaComment Guidelines (150 word limit)
Other Electricity News
Article contains comments
Updated 1 hour 25 minutes ago Despite a decline in construction activity, confidence in the civil construction industry, as measured by the First National Bank (FNB) and Bureau for Economic Research (BER) civil confidence index, increased in the third quarter of the year, FNB said on Monday....
Updated 2 hours 8 minutes ago Energy efficient commercial buildings in South Africa delivered better returns than non-energy efficient buildings, a new study by the Investment Property Databank and the Green Building Council of South Africa has shown. The study, which investigated 461 commercial...
Updated 3 hours ago The Coega Development Corporation (CDC) has announced ambitious plans for the expansion of metals beneficiation initiatives and metals sector investments in South Africa through its newly unveiled 2014-2024 metals cluster strategy, which it hopes will attract...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
While Ekurhuleni-based transformer manufacturer Reliable Transformers currently designs, manufactures and tests its products according to the SANS 780 specifications for distribution transformers and other applicable transformer specifications, it is working towards...
Global endpoint security solutions company Kaspersky Lab has introduced new measures to prevent cyber criminals from accessing sensitive data, alongside its malware-signature and heuristic device analysis detection methods. Threats to mobile devices have increased...
To ensure uptake and a positive impact, Wireless Fidelity (Wi-Fi) networks in cities must be provided at schools, community centres and commercial centres to enable citizens and government to access information that will improve access to and delivery of services....
Eco-estate Monaghan Farm, located near Lanseria airport, north-west of Johannesburg, has taken a new approach to modern living and sustainability with its 517 ha development, dedicated to farm living.
Forklift and lift-truck distributor Goscor Lift Hi-Reach launched the Genie SX-180, the tallest self-propelled super boom in Africa, in Johannesburg last month. “As the official distributor of the well-known Genie range of equipment in Southern Africa, we are pleased...