Kannaland Municipality needs R12.7m to avoid Eskom cutoff

2016-02-10 21:13
(Duncan Alfreds, News24)

(Duncan Alfreds, News24)

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Cape Town - The Kannaland Municipality is urgently looking for R12.7m to avoid getting cut off by Eskom later in February.

If it does not get the money, residents and businesses in the towns of Ladismith, Calitzdorp, Van Wyksdorp and Zoar, in the Western Cape's fruit belt, will we powerless from 26 February, the provincial legislature was told on Wednesday.

Ladismith is home to one of the country's better known cheese producers and Calitzdorp is famous for its port grapes. 

Besides not having lights, any support systems that rely on electricity will be down - from communications, to water and sewerage system pumps.

Municipal manager Morne Hoogbaard told the Western Cape legislature that the area is a seasonal agricultural belt with unemployment significantly higher than the national average.

It also has a very high number of indigent people - people too poor to pay for services.

“This impedes revenue collection,” Hoogbaard explained.

In Zoar in particular, the municipality is making a huge loss. To complicate matters, because Eskom supplies the electricity, it cannot do credit controls and cut people off when they do not pay.

The municipality is managing to pay its current account to Eskom.

However, the monthly payments of around R500 000 to pay off the R12.7m debt are crippling it.

The municipality has proposed to Eskom that it pay R8m of its R12.7m arrears in full and final settlement of what it owes. 

If approved, it will draw on a R7.3m loan it secured from Standard Bank by putting up municipal assets as collateral. It will pay this back over 84 months.

But the proposal has hit a snag. Treasury does not allow borrowing to cover debt. It will only approve borrowing for capital expenditure and infrastructure.

Mayor Jeffrey Donson told the provincial select committee on local government that the municipality is so short-staffed that most people are doing the jobs of at least three others. It does not have the money to hire more people.

Read more on:    eskom  |  cape town  |  local government

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