Municipalities in the red

2019-12-04 06:00

Free State municipalities remain in the doldrums, hamstrung by huge debts to Eskom and bulk service providers, as well as the inability to render basic services.

These municipalities, as a collective, reportedly owe debtors R19,38 billion in the current financial year, while their debt stood at R15,72 billion last year.

Debts owed to bulk service pro­viders such as Eskom stood at R9,8 billion and those owed to water boards at R3,8 billion.

A staggering R9,4 billion debt is owed by the Free State’s two largest munici­palities (the Mangaung Metro with R6,1 billion and Matjha­beng with R3,3 billion), which are deemed the province’s main economic drivers.

The state of Mangaung resurfaced on 19 November when Eskom threatened with the interruption of electricity services due to defaulting payments.

Centlec, a municipal entity responsible for electricity reticulation in Mangaung and surrounds, reportedly owes Eskom about R100 million.

A last-ditch meeting was held on 25 November by Thembeni Nxangisa, MEC for Cooperative Governance and Traditional Affairs (Cogta), with Eskom and the Mangaung authority to avert the planned interruptions.

According to Eskom, it has been receiving late payments since August this year, contrary to Mangaung’s claim that Centlec does not owe Eskom, and the entity (Centlec) is servicing the current.

According to Eskom, the October account, amounting to R148 million, became overdue on 16 November. In addition, R21 million is more than 90 days overdue.

According to Qondile Khedama, spokesperson for the Mangaung Metro, the meeting agreed that Centlec does not owe Eskom and is servicing the current account.

Mangaung and Centlec have been red-flagged due to the financial situation and huge debt to Eskom. Both received qualified audit opinions for the 2017-’18 financial year, stretching to the current year.

The crisis of the Mangung Metro, as well as eight other municipalities in the province, was raised during the National Council of Provinces’ provincial week programme. The beleaguered Mangaung is still facing a crisis of waste collection, for which it blames staff short­ages.

The other municipalities in a similar financial crisis are Letsemeng, Tokologo, Setsoto, Nketoana and Matjhabeng, which, it has emerged, have an overdraft standing at R428 million.

These municipalities reportedly also owe huge debts to Eskom, with some in the process of making payment arrangements to avoid power interruptions.


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