Government working to resolve municipal debt owed to Eskom — Deputy President

DeputyPresident PaulMashatile saysgovernment and Eskom are working together to resolve the “inherent risk” that municipal Eskom debt hason thestability ofthe powerutility and the economy.

TheDeputyPresident wasspeakingduring hismaiden QuestionandAnswer sessionin the NationalAssembly onThursday afternoon.

By theend ofDecember lastyear, municipalitiesowed EskomsomeR56.3 billionfor unpaid bulk electricity supply – a number that Deputy President Mashatile said is growing.

“The debt is rising. It is clear that we need a debt relief strategy thatwill acknowledge the inherent risk of unviable municipalities. In this regard,Eskom willprovide incentivisedrelief to municipalities whose debt it unaffordable,” he said.

Deputy President Mashatile said the relief willcome withconditions thatmunicipalities are bound to adhere toin an assurance that “there will be no repeatof debt build up over time” “Someof theconditionswill include,the installationof prepaidmetersto correctthe underlying behaviourof non-paymentand operational practisesin theaffected municipalities.

“Municipalitiesmustuse themoneythey are allocated effectively and efficiently for the intendedpurposes. Ifthisisnot thecase, thereshould beconsequences. Inaddition, the NT is preparinga Municipal Finance ManagementAct (MFMA)circulardealing withthe relief strategy regarding municipal debt owed to Eskom which is expected to be released later this month.

“The culture of non-payment – not only by municipalities – by allorgans of state, individualhouseholdsand customersisconcerning. Wecannot overemphasisetheneed todis- couragea cultureofnon-payment forpublic services,” he said.

The Deputy President emphasised that changesmade onnew generationcapacity will alsoallow municipalitiesto independentlyprocure powerinorderto provideelectricityfor businessesandhouseholds andgenerate additional revenue.

Eskom’s financial challenges

Deputy PresidentMashatile addedthat this poses significantfinancial challenges for Eskom which have to be addressed.

“In addressing theutility’s financial challenges, government hasannounced further measures on Eskom.

“Thedebt reliefof R243billionwill beimplemented over the nextthree years. Government’s intervention of explicitly taking on this debt is aimedat reducing fiscal risksand enhancing long termfiscal sustainability,” he said.

TheDeputy PresidentsaidR184 billionof the relief willgo to servicing thepower utility’sdebts,up toR70billionwill gototaking over some of Eskom’sloan portfolio in the 2025/26 financial year.

“This will allow Eskom to focus on its operating cash flow, onmuch needed maintenanceand capitalexpenditurewhile atthe same time, reducing Eskom’s debt of R168 billion.

“Further to this work,the government is continuingwith themediumto longterm plans of adding additional capacity to the grid. We are committed toclean energy solutions including investing inrenewable energy solutions.

“Itis ourhope thatallthese measureswill facilitate and charge theway towards energy security resulting inan inclusive economic growth andjob creation,” Mashatile said. SAnews.gov.za