Eskom plans to get its R4.7bn from councils

2015-02-22 15:00

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Government is planning to come down hard on municipalities and government institutions that owe Eskom billions of rands – and will even enlist the services of debt collectors to help.

Public Enterprises Minister Lynne Brown revealed this week that municipalities owed Eskom a whopping R4.75?billion and the state had instructed the power utility “to go get that money”.

In her speech to the joint sitting of Parliament this week, Brown said there was a “very worrying trend on the distribution front”, as many municipalities were not paying Eskom fully or at all.

She said several engagements had been held by Eskom and provincial and national government departments with municipalities to deal with the issue of payment.

“To date, the velvet glove approach has not yielded the kind of results we are seeking. Eskom will be exploring further measures, including disconnections in cases in which municipalities actually have the money and are deliberately withholding it.”

Brown later said the interministerial committee on state-owned companies, chaired by Deputy President Cyril Ramaphosa, was examining various options. One of these was to bring in service providers who would help municipalities with debt collection through Eskom and the Development Bank of Southern Africa.

Brown said they were also looking at splitting payments, where 70% of revenue would be paid to Eskom and 30% to municipalities. Another option was to amend the relevant cooperative governance legislation to allow Treasury to withhold municipalities’ direct allocation of funds and pay that money directly to Eskom on behalf of municipalities.

“The municipalities owe us about R4.75?billion. This is a very complex matter because some of the municipalities are not sustainable and can’t run as municipalities,” said Brown.

She said municipalities sometimes collected money from ratepayers, but used it for their work instead of paying it to Eskom.

“What we are now focusing on – I think we have tried and had an interministerial committee on this for over a year – is to try toget municipalities to pay.

“We have also asked Treasury to look at a way where we [give a] haircut to the municipalities at allocations. Before they get the funding, they must pay off Eskom.”

Brown said there were municipalities that were not paying, but which had the money, and those were the ones they were targeting.

“Those municipalities must pay. We’ve also said government buildings and government institutions must pay and we have asked Eskom to give us the list of the debtors.”

This would all happen in the first six months of this year, according to Brown.

She repeated that there was no energy crisis in South Africa.

“I don’t think it’s a crisis when there is a solution. It’s also semantics; it’s a thing the media likes to play: is it a crisis or is it not a crisis?”

“In some ways, it was part of the unintended consequences of a huge number of people on the grid, which is also rising. I think this time around we’ve got to take a long-term solution for what we need to do.”

Brown said despite “the common narrative” that the Medupi Power Station would never come on stream, it had been blowing energy-giving steam through its boiler since December.

“It’s starting to revolve at 3?000 revolutions a minute and, by June this year, Medupi will be producing 800 megawatts. That’s a milestone for Eskom,” said the minister.

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