Municipalities too poorly managed, MPs told

2012-07-26 10:09

Cape Town - Municipalities are too poorly managed at the moment to be reliable electricity distributors, MPs heard on Wednesday.

There was no clear strategy to solve the problem, co-operative governance deputy director Ongama Mhalawe told Parliament's portfolio committees on energy and co-operative governance.

He said municipalities were plagued by a lack of technical capacity, funding gaps, and poor revenue management.

Evidence of this was a collective municipal debt of R76bn, of which R12.7bn consisted of unpaid electricity bills.

Mhalawe was speaking on the first day of public hearings on energy distribution industry (EDI) problems.

Fifty-four percent of users getting electricity

He said: "If we don't deal with the issues, including governance, we won't be able to deal with electricity distribution."

According to figures from the energy department, municipalities provide electricity to roughly 54% of the country's users and had an asset maintenance backlog of R27.4bn in 2008. The figure has been increasing by R2.5bn a year and now stood at R35bn.

National Energy Regulator of SA (Nersa) member Thembani Bukula said municipal distribution chain woes, including licensing breaches, were a function of wider mismanagement.

The regulator proposed ring-fencing funding for asset maintenance.

"They're not very good at building roads or supplying water either," Bukula said.

"There is no reason in principle why municipalities should not distribute electricity, but in the current situation it is not ideal."

Money to deal with backlog available

Auditor General Terence Nombembe's annual report last week revealed that only 13 of the country's 343 municipalities received clean audits in the past financial year.

Nombembe also faulted municipalities for R11bn in unauthorised and irregular expenditure.
Eskom's executive head of distribution Ayanda Noah said it was lamentable that wasted state funds could have paid for a third of the maintenance backlog.

"It shows that the money to deal with the backlog is in the system."

She said Eskom believed direct transfers to local government to fix the problem were "a last resort measure only".

Noah called for a "pragmatic approach" to transforming the distribution industry, and commented that after two decades in which dominant thinking demanded it be completely overhauled, this had failed to happen.

"History probably tells us that we don't have the appetite for large-scale restructuring," she concluded.

‘Analysis mode’

Presenters made the point that stripping municipalities of their distribution capacity was not a viable option, as proven by the shelving of the regional electricity distributors’ programme.

It was halted because municipalities would lose a vital revenue stream, often used to cross-subside other services.

Academics from the Cape Peninsula University of Technology said it appeared the energy department was languishing in "analysis mode" when it needed to tackle the problem.

They proposed that Nersa administer the necessary funds for asset maintenance as part of its licensing functions.

The hearings continue until Friday.

  • Gavin - 2012-07-26 10:18

    it's scary that the the folks we reply on to keep the lights 'on' are such a bunch of incompetent morons. SA is now like a cancer patient with what was a relatively healthy body, now riddled with tumors that are slowly killing her.

      procold2 - 2012-07-26 10:24

      what scary is that they needed a hearing to find out what we have known for the last 18 years.

      ludlowdj - 2012-07-26 10:27

      As with cancer, we need to kill the virus.

      anton.burger.16 - 2012-07-26 11:13

      It can all be summed up as....AA & BEE.....thank you!!

  • Bless Boswell - 2012-07-26 10:31

    These are the people that will be receiving those salary increases. The fact that they justify the increases a d believe they deserve them is very scary.

  • Allan - 2012-07-26 10:33

    The ANC has politicised municipal services staffed with people where the only requirement is being a loyal ANC member or being part of the ANC system. Skill and related delivery has never been part of the requirement and now we question why it's not working? The possible recovery from this point is going to be a very painful process and going a long time to repair if we ever get there.

      Koos - 2012-07-26 10:44

      I can assure you Allan, there is no recovery from this.

  • azande.futhi - 2012-07-26 10:35

    Yawn... its tiring to hear about one thing everyday. incompetence no consequence.

  • oom.koos.7 - 2012-07-26 10:39

    Not true..there is a culture of non payment for services which was introduced by the ANC many years ago.They just have made NO effort to undo that culture.

  • Koos - 2012-07-26 10:39

    WOW, they come up with all these nice excuses and politically correct terminology to make incompetence sound good. What is even scarier is who is employed and the salaried the “challenged” people get. Then they themselves come up with politically correct justifications to “pay themselves” even more. Here is a few I’ve heard over the years that stand out (These are actual requests and I’m not joking): Please pay XXX R4500.00. Justification: She works more. Please pay XXX R5000.00 per month. Justification: Skills transfer allowance. (As if the one who was acting actually knew what he was doing.) Please pay XXX R 3000.00 per month. Justification: Insuring people within the institution does not waste money. Please pay XXX and additional RXXXX.XX. Justification: Others get more money. Please pay XXX Level X pay combined with his own pay. Justification: He does his subordinates work. Then of course there are the performance bonuses. I tell you, it’s enough to make a grown man cry.

      shellerjc.rjc - 2012-07-26 11:52

      Eskom, "retrenshed" (due to affirmative action) a family member of ours, when they had no cooking clue as to how to fix a little problem at one of their subs they called on our uncle to return, He told them NO! They had did not want the white man there - so now its their problem.

      Koos - 2012-07-26 12:05

      @Shelley: I know a few people previously where employed by Eskom. They left for the reasons everyone knows. Now they are back as contractors and advisors making a killing. You should tell your uncle to go back and work for them at 4...5...6 times his old salary. Who cares what those fools do, they are only interested about how high their chairs backs are and the material used to make their chairs and of course the pay cheques. Your uncle can be coining it now doing half the work. He should not be stupid.

  • aubrey.wakasambo - 2012-07-26 11:17

    And these are the very same oaks calling for the nationalisation of mines. Something is not right here.

  • rudi.debeer.5 - 2012-07-26 11:43

    Pre paid meters for everyone. And buying electricity at supermarkets. Clear and simple.

      Koos - 2012-07-26 12:17

      Even buying electricity at supermarkets does not mean you buy form Eskom. Of course the fact that less then 10% of the users actually holds municipalities "sort of standing" does not help either.If you see the number on no compliance and non payment I see every day you WILL pee your pants. In short, prepaid meters are for law abiding citizens (AKA stupid fools being milked by the man) to pay what is due so that cANCers can pull huge pay cheques and to ensure that the cANCer brothers can steal what they want without town infrastructure completely collapsing. Sounds harsh I know but that is really the way it is.

      rudi.debeer.5 - 2012-07-26 13:23

      May be koos. But we need a reliable entity where you can buy electricity. The municipality has failed dismaly in doing just that.I suppose that the thumbs down are probably someone who does not pay for electricity.It is clear that one of the biggest problems are billing, with prepaid we will have none of that problems.

      Koos - 2012-07-26 16:04

      Hehehehe rudi do I have news for you. The prepaid you buy gets vended from your municipality no matter where you buy. I can give you one little titbit about prepaid systems in this country. The only thing that works is the tokens and the meter number. The rest of the information is so bad you can’t use it. If you bypass you prepaid meter (and a lot do) chances are the municipality won’t even know about it and even if they know about it chances are they won’t know where the meter is or who the current registered user is. People have no idea what a mess these institutions are but more specifically the vending and financial systems are in disarray (and I’m being nice now). Fraud and theft is NOT the exception.

  • shellerjc.rjc - 2012-07-26 11:47


  • luke.dekoker - 2012-07-26 11:58

    These idiots won't stop until they have destroyed everything.. Turn the once well functioned & clean country into a litter scattered, tin shack drinking holes, overgrown bush-like pavements, pothole roads and wood fires for light. this is where they feel comfortable (their environment heritage as terrorists).. DOWN with the ANC!!

      Koos - 2012-07-26 12:06

      Sounds like you know here I live.

  • Rebecca - 2012-07-26 12:28

    The cANCer government is on a path to destroy this country and rape every last cent out of the tax payers for a few fat cats and their BMW’s. Down with BEEEEEEE or however many E's they have put into the silly word now. Let's get this country to where it needs to be, bring in the brains, get people working that can do the job that can fill all these open positions and make this a better country.

      derrico.heus - 2012-07-27 08:37

      Sadly this government want to take south africa back to the trees. They will force most whites to leave, whilst looking after themselves and their families by stealing tax payers money. Every modern government around the world don't take zuma and his stupid government seriously. In europe zuma's the clown. In america he's the dumbo. Its such a shame to see a perfectly good country ruined by this dreadfully stupid government.

  • andre.burrows.92 - 2012-07-26 12:45

    This is the result of AA....1000 incompetent well paid AA managers and 50 million people suffer. Keep struggling comrades!

  • trevor.roberts.148 - 2012-07-26 13:03

    How many years has it taken to figure this one out!!.

  • derrico.heus - 2012-07-27 10:07

    Sack em! Send them back to cattle herding school.

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