Mangaung Metro, Richtersveld, and Inxuba Yethemba municipalities are on the brink of being removed from the Eskom debt relief programme.
This is according to the 2025 Budget Review of Revenue and Spending by Provinces and Municipalities document. The Minister of Finance, Enoch Godongwana, revealed this in his budget speech.
He said these municipalities are failing to collect the mandated 85% revenue. They have been constantly defaulting, he added.
Failing to meet the required conditions
The three municipalities have already been served with warnings, said the minister. He highlighted that 47 of the 71 municipalities are failing to meet the required conditions for the programme.
These municipalities received monthly support from provincial treasuries, but are still challenged with financial management, he said.
“Termination from the programme will require municipalities to repay their debt and accumulated arrears in full. This while facing credit control measures from Eskom, such as legal proceedings and the introduction of prepaid bulk electricity systems.
“The National Treasury and provincial treasuries will continue to enforce programme conditions and support municipalities,” said Godongwana.
He explained that only 11 municipalities have had one-third of their debt written off after meeting the requirements.
Defaulting municipalities a huge challenge
Godongwana said the National Treasury has planned to write off these municipalities’ debt to Eskom over three years. However, the defaulting municipalities make this a challenge.
This includes implementing sustainable management of free basic services, cost-effective tariffs, and exploring smart prepaid meters to improve financial stability and revenue collection.
“Eskom continues to rely on government support through the debt relief arrangement in order to operate.
“Revenue grew by 14% to R295.8-billion in 2023/24 due to an 18.7% tariff increase, while sales fell by 3%.
“Losses doubled to R55-billion in 2023/24 due to tariffs that do not reflect costs. Also due to poor operational performance, non-payment by municipalities, and high finance costs.
“Municipal debt to Eskom rose from R74.4-billion at end March 2024 to R94.8-billion at end December 2024,” said Godongwana.
