Eskom joins forces with municipality in fresh bid to boost revenue collection

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Photo: Getty Images
Photo: Getty Images
Photo: Getty Images
  • Municipalities owe Eskom over R35 billion in unpaid electricity bills, with the power utility having to resort to asset attachments to secure payments.
  • Eskom, however, has partnered with Msunduzi municipality in KwaZulu-Natal to assist in building technical and administrative capacities to boost revenue collection.
  • The partnership with the municipality will extend over three years.

Eskom has entered into a three-year Active Partnership Agreement with Msunduzi Municipality in KwaZulu-Natal, which seeks to boost revenue collections.

The power utility on Wednesday issued a statement indicating that Eskom will assist the municipality in capacity building and skills transfer.

"This three-year agreement is the first in a series of Active Partnership Agreements that Eskom will be entering to to assist municipalities to rebuild their internal technical and administrative capacities, and to boost revenue collection," the statement read.

"Through these agreements, Eskom hopes to help contribute to the rebuilding of municipal capacity to increase the municipalities' ability to deliver on their constitutional obligations of service delivery to their communities."

As of the end of March, municipalities owed Eskom over R35 billion. Partnering with municipalities could potentially arrest the spiralling debt, Eskom said.

For Msunduzi Municipality in particular, maintenance and the upgrading of the municipality's distribution network and substations will be prioritised, said Eskom.

"For its services, Eskom will invoice the municipality accordingly, and the municipality will reimburse Eskom for all costs incurred.

"The municipality and Eskom are in talks for a possible increase in the scope of the agreement to include account management, billing systems and revenue collection."

During a virtual discussion hosted by the Free Market Foundation in February, Eskom CEO Andre De Ruyter said that many levers had been used to persuade municipalities to pay; these include attachments of bank accounts and assets. However, the active partnering model has proved useful.

Eskom had been trialing it with the Maluti-a-Phofung Municipality in the Free State, De Ruyter said at the time. "In essence, Eskom steps in [and] acts as the agent for the municipality. Maintains the infrastructure, substations, distribution network and so forth, assists with billing, installs pre-paid meters. But also, very importantly collects revenue on behalf of the municipality, and that revenue is collected and paid into the Eskom bank account."

This way, Eskom can ensure the current account is serviced on a regular basis.

"If you prevent the further build-up of incremental municipal debt, that is a very good start toward addressing the debt problem," De Ruyter said. He added that the active partnering is constructive for engaging with municipalities, as it ensures Eskom gets paid and addresses service delivery issues with regard to electricity supply by allowing for the power utility to step in.

De Ruyter noted that there is still legacy debt to be addressed, but the power utility is working with government departments to work this out.

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