City’s huge Eskom debt

2010-03-23 00:00

FINANCIAL woes continue for the beleaguered Msunduzi Municipality, with revelations that it owes power utility Eskom R42 million.

The municipality, which buys electricity from Eskom and sells it to consumers, is reportedly facing a daily interest charge of between R10 000 and R15 000 over the outstanding amount.

Sources told The Witness that acting municipal manager Kevin Perumal, chief accounting officer Roy Bridgmohan and Msunduzi’s administrator, Johann Mettler, met a representative from Eskom last week in a bid to negotiate a way forward.

Sarah Beemiah, Eskom’s spokeswoman for the eastern region, declined to comment, citing the confidentiality of Eskom’s contractual agreement with the municipality.

When contacted for comment, Perumal said: “The council is currently in negotiations with Eskom over the matter and will revert to you shortly.”

Mettler confirmed that a meeting has taken place with an Eskom representative about the debt.

He said he has been given the task of authorising expenditure for the settlement of the debt, but after consulting the Provincial Treasury task team that has been deployed in the municipality about the financial position of the council, he came to the conclusion that it would be irresponsible to approve payment as yet.

Mettler said the reason for this is that insufficient information has been made available for him and the task team to make a responsible decision about payment, although they are mindful of the contractual agreement that states that the Msunduzi Municipality is liable.

He continued: “I’m aware that the interest charged would amount to an audit query when the books are audited.”

The municipality has undertaken to respond formally to Eskom’s correspondence once the additional information has been carefully examined. Negotiations are continuing.

Mettler said the municipality will have to chase bad debts to find the necessary funds to settle its own debts.

As previously reported by The Witness, Municipal Finance Management Act adviser Kumaran Nair, who was deployed to the municipality with the provincial task team, warned that the municipality’s debt- and credit-control policies are very weak.

Nair pointed out that officials employed in Msunduzi Municipality’s revenue and debt management division have “yet to win a case against a defaulter whose municipal services have been terminated as a result of non-payment.

 

 

 

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