Jul 26, 2012
Municipalities inadequate – officialBack
Eskom|Roads|System|Water|Building|Electricity|Electricity Distribution|Electricity Distributors|Energy|Energy Distribution Industry|Maintenance|Services|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
Kenya Power plans to spend 8.7-billion shillings ($96.6-million) on new power distribution stations to improve electricity supply aimed at curbing chronic power shortages that companies say have discouraged investments. Kenya Power, the country's main electricity...
Anglo American Inyosi Coal and Eskom “are broadly aligned” regarding Eskom’s empowerment imperatives for the New Largo project, Anglo American coal business in South Africa CEO and Anglo American Inyosi Coal chairperson Themba Mkhwanazi reported on Friday. In a...
Barack Obama last year told a cheering crowd in Cape Town that a $7-billion plan to "Power Africa" would double electricity output on the world's poorest continent and bring "light where currently there is darkness". A year later, the US president's flagship project...
Updated 7 hours ago South Africa’s National Treasury on Friday reissued its amended request for proposal (RFP) for the five-year multibillion-rand project to replace the legacy systems currently in use with an enterprise resource planning (ERP) solution for an integrated financial...
Updated 7 hours ago The handover of specialised computer equipment to the Umfolozi Technical and Vocational Education and Training College would address one of the greatest challenges faced by Transnet Port Terminals (TPT) at the Port of Richards Bay – a lack of skills in a highly...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
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.
This Week's Magazine
As the City of Ekurhuleni continues its bid to develop the largely industrialised metropole into the continent’s first aerotropolis, executive mayor Mondli Gungubele has committed the city to creating a predictable, stable and enabling business environment in which...
While Ford Motor Company of Southern Africa (FMCSA) did not have “significant issues” with power supply in Gauteng, it was a different story in the Eastern Cape, said FMCSA and American Chamber of Commerce in South Africa president Jeff Nemeth earlier this month....
In 2000, exports into Africa from South Africa represented less than 5% of the turnover of Federal Mogul Motorparts Africa, with sales largely centred around Zimbabwe, Zambia, Malawi and Mozambique. Today, African exports represent 30% of sales, with trade expanded...
The Malawi government has launched a $50-million project to upgrade the Kamuzu barrage, on the Shire river, an outlet of Lake Malawi, which is used to control the flow of water from the lake to the lower Shire area. The project will run from this year to 2017 and...
Our new Technical and Vocational Education and Training (TVET) Colleges will replace the Further Education and Training (FET) Colleges which have served us for the past twenty years. The buildings will be the same and most of the staff will be the same but as the...