Cooperative Governance and Traditional Affairs Minister Pravin Gordhan indicated on Thursday that progress was being made in finding a “win-win” resolution between Eskom and 20 municipalities that collectively owe the electricity utility nearly R4-billion in arrear debt.

In April, the financially distressed utility indicated that it planned to disconnect supply to defaulting municipalities from June 5, leading to an outcry from business and residents, as well as the institution of legal action against the move by AfriForum.

South African Local Government Association (Salga) also warned of “major impacts, not only for the municipalities concerned, but also for the economy, essential services such as hospitals, clinics, schools, businesses and communities, including those who have paid their utility bills”.

Salga also raised concerns over the National Treasury’s threat to withhold equitable-share disbursements to defaulting municipalities.

Gordhan said meetings had been held with the mayors of the 20 affected municipalities, where it was agreed that current debts should be settled and assurances be given on the settlement of outstanding debts.

The mayors were also instructed to play a leadership role in ensuring compliance with the terms of any debt-settlement agreements with Eskom.

Gordhan was unable to say how many municipalities had reached settlements with the utility, indicating that the number was changing on a daily basis.

However, he stressed that it was a process rather than an event, with the initial focus having been on moving the matter from a “crisis state” to one where it could be managed sustainably.

As would be the case with any creditor Eskom “would have their rights in the matter” and could, thus, still move to disconnect defaulting municipalities. “But at the end of it, we are looking for, and I think we are beginning to get to, a win-win situation.”

Part of the long-term solution lay in improving the payment culture. “We cannot have a situation, where part of our communities . . . say they are willing to receive a public service . . . but I’m not willing to pay for either all of it or any of it. We believe that all South African must pay their fair share in relation to the services that they consume.”

Municipalities also needed to improve financial management, reduce waste and crack down on the fraudulent manipulation of indigent lists, which exempted business people, civil servants and politicians from paying for municipal services.

“That kind of irresponsibility from people who can afford to pay must surely be a socially unacceptable phenomenon in South Africa.”