Why Western Cape municipalities' Eskom debt is likely to increase
The Western Cape's treasury department warned that municipalities, which have outstanding Eskom debt, could see it balloon in the new financial year.
The department briefed the standing committee on local government on Tuesday about late payments to Eskom.
According to the department, it takes numerous steps to ensure municipalities don't drown in Eskom debt.
As of January this year, the Beaufort West, Cederberg, Kannaland and Matzikama municipalities owed Eskom R275-million combined.
This was a 7.27% increase compared to August last year, when the debt amounted to R255-million.
The department's Steve Kenyon told the committee they specifically monitored the payment of creditors, and the payments made by the municipality.
"We have many workshops throughout the year with the municipalities," he said.
Kenyon said the National Energy Regulator of South Africa's decision to grant Eskom an 18.65% tariff increase from the start of April would filter through to municipalities on 1 July - and they were limited on the cost they could pass onto residents.
"Whatever profit municipalities make on their electricity will also subsidise other services because the municipality does not have many areas of revenue, so their revenues are limited to rates, water and sanitation, and electricity," he said.
Kenyon added that more and more customers were becoming indigent.
Indigent households earn a combined income of less than R3 200 per month.
"What we are seeing is that the basket of revenue coming from electricity is reducing, and we will see an increase in the debt owed to Eskom," he said.
The chairperson of the standing committee, Isaac Sileku, said Western Cape municipalities were responsible for only 0.5% of outstanding municipal debt older than 30 days to Eskom.
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