Eskom says it is stepping up its debt recovery efforts in Mpumalanga, as municipalities in the province struggle to meet their financial obligations.
The failures have contributed to a nationwide municipal debt crisis that now stands a staggering R82.3-billion.
Despite these efforts, concerns from the Democratic Alliance (DA) and Mpumalanga’s Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) MEC, Speedy Mashilo, highlight the deep-rooted challenges faced by local governments in the region.
Comprehensive debt management strategy
Eskom told Sunday World on Tuesday that the utility has implemented a comprehensive debt management strategy. This is aimed at improving revenue collection from municipalities.
The strategy includes partnering with municipalities and negotiating payment arrangements. Also taking legal action where necessary.
“Eskom has developed a debt management strategy aimed at improving revenue collection,” a spokesperson at Eskom said.
“We are also working with the National Treasury on the implementation of the National Treasury Debt Relief Programme.”
The utility acknowledged a huge loss to non-technical losses. These include illegal connections and meter tampering, and are a significant burden on its finances.
“Eskom loses above R5-billion per annum on non-technical losses. These include illegal connections, meter tampering, and ghost vending,” Eskom added.
“This results in injuries and extended periods without electricity for communities.”
Efforts to stabilise SA’s electricity supply are at risk
Eskom’s efforts to stabilise South Africa’s electricity supply are at risk. This includes the suspension of load shedding for over 130 days. This suspension is as of August 2024. These efforts are at risk due to municipalities’ failure to settle their debts.
“The failure of municipalities to pay for the bulk electricity they consume directly impacts Eskom’s financial stability. This in turn affects our ability to generate and supply electricity at reasonable prices,” Eskom emphasised.
The DA has voiced strong criticism of the Mpumalanga provincial government’s handling of the debt crisis. Particularly in the municipalities of Emalahleni, Govan Mbeki, and Lekwa. These collectively owe Eskom over R15.8-billion.
James Masango, DA spokesperson on CoGHSTA in Mpumalanga, expressed disappointment.
“It is very disappointing to note that the financial crisis has been left to deteriorate in these municipalities. This over the past eight years,” Masango said.
“The ANC administration failed to appoint skilled administrators to ensure adequate billing systems are in place. This to address the issues of poor debt collection and the subsequent repayment of creditors.”
DA wants answers, action
The DA further accused the department of failing to implement effective interventions.
“Provincial interventions have proven ineffective. These include… the integrated municipal support plan and the financial recovery approach,” he added.
“Municipalities like Emalahleni and Govan Mbeki continue to struggle with debt repayment. This due to their …persistent inability to generate revenue from the sale of services.”
The opposition party is calling for Mashilo’s urgent intervention. It urged him to consider placing some of these municipalities under administration.
“Noting the severity of the financial crisis in these municipalities, we will write to the MEC of CoGHSTA, Speedy Mashilo. We will ask him to take a hands-on approach. To consider placing some of these municipalities under administration,” Masango said.
MEC Mashilo recently acknowledged the challenges faced by municipalities in Mpumalanga. He attributed their financial woes to fruitless and wasteful expenditure. Also failures in billing for water connections, which has left their revenues in the red.
“The financial situations of some municipalities remain a concern,” Mashilo stated. He was addressing a provincial legislature. “Their liquidity ratio indicates that they do not have sufficient funds to pay their creditors. No funds to pay… salaries, or third-party obligations for the next three months.”
MEC makes commitment
MEC Mashilo also announced the re-establishment of the Municipal Finance Directorate. The entity will work closely with Provincial Treasury and Salga. This to improve the financial performance of municipalities.
“The directorate is now officially established. And we are fully committed to enhancing our support for municipalities in this regard,” he said.
“Our key focus areas include improving audit outcomes, reducing unauthorised, irregular, fruitless, and wasteful expenditure. And ensuring that municipalities pass funded budgets to stabilise their finances.”
Mashilo outlined plans for a smart metering intervention, funded by the National Treasury. It aims to modernise municipal infrastructure and enhance revenue collection in 10 identified municipalities. These include Msukaligwa, Mkhondo, Lekwa, and Emalahleni.
“The benefits of these contracts will help deal with billing accuracy. Also revenue enhancement, and proper customer service,” Mashilo explained. “The department will monitor the implementation. And ensure that local content is utilised for the smart meter installation.”
