The National Treasury is due to issue a final decision on the request by Mogale City to have part of the municipality’s historical debt of more than R260-million owed to Eskom written off, and mayor Lucky Sele says he is confident that his administration has ticked all the necessary compliance boxes.
Sele anticipates that a positive outcome to scrap up to R70-million of the Eskom debt would be a cherry on top of his term as he marks his first 100 days in office next week – over and above the unqualified audit opinion the municipality obtained in the 2023/24 financial year.
The R70-million is approxi-mately one-third of the outstanding payments, and for the provision to be granted, the municipality must be up to date with its current account balance, Sele told Sunday World in an interview.
The debt relief support programme is designed to assist municipalities in settling their debts to Eskom, aiming to foster a culture of payment for municipal services and enhance Eskom’s financial stability.
Participating municipalities must adhere to conditions like settling current accounts and limiting further borrowing, or face electricity reduction.
Rand West Municipality was the first to benefit with a one-third debt write-off, while Emfuleni, Govan Mbeki, Matlosana, and Mbombela have also applied.
A report presented in council this week noted that “Mogale City has fully complied with the debt relief conditions, and the Gauteng Provincial Treasury has completed its assessment, which has been shared with the National Treasury [and] Mogale City is awaiting the National Treasury for the write-off decision”.
Sele said a relief from Eskom would result in improved cash flow, enabling the municipality to meet its financial obligations more efficiently. By alleviating the burden of historical debt, the municipality has unlocked funds that were previously tied up in repayments, he said.
Sele added: “This enhanced liquidity allows for timely payment of operational costs such as employee salaries, procurement of goods and services, and other routine expenditures necessary for seamless municipal operations. Furthermore, the additional financial flexibility would pave the way for strategic investments in areas that directly benefit the community, such as capital projects and emergency contingencies.”
Sele said the reduction in financial pressure would directly translate into increased allocation of resources towards essential services.
“The municipality can now focus on upgrading and maintaining critical infrastructure, including water supply systems, sanitation facilities, electricity distribution networks, and road infrastructure.
“Improved funding allows for quicker response times to service disruptions, more comprehensive maintenance schedules, and the ability to initiate community-focused development projects. This enhanced service delivery not only improves the quality of life for residents but also fosters trust between the municipality and its constituents.”
Sele said the suspension of interest accruals had provided much-needed breathing room in the budget.
“This reduction in interest-related expenditures has also positively impacted the unauthorised, irregular, fruitless, and wasteful expenditure account, ensuring better compliance with financial regulations and governance standards. The funds can now be
reallocated to developmental and operational priorities.”
Sele said the Eskom debt relief would markedly improve the municipality’s financial stabili-ty. With reduced liabilities, the municipality had seen a positive impact on its liquidity position and the ability to manage creditors more effectively, he said.
“This improvement bolsters financial sustainability, ensuring that the municipality can meet both its current obligations and future commitments. Enhanced financial stability also improves the municipality’s creditworthiness and opens avenues for potential partnerships or funding opportunities.”
The municipality would then be in a better position to pursue long-term developmental goals while maintaining fiscal discipline and improving credit-worthiness with reduced liabilities, Sele said.
