Municipalities can't pay up because they're not being paid, MPs hear

The debt owed to municipalities far outweighs the debt municipalities owe to Eskom and water boards, members of Parliament heard on Tuesday.

Thembi Nkadimeng, president of the South African Local Government Association (Salga) on Wednesday addressed MPs during a debate on President Cyril Ramaphosa's State of the Nation Address. In his address Ramaphosa announced that government would allow municipalities in financial good standing to procure power from independent power producers.

Salga represents 257 local governments. Commenting on the financial position of municipalities, Nkadimeng noted that R25 billion and R14 billion is owed to Eskom and water boards, respectively, and that they are threatened with disconnections from these entities for failure to pay. Municipalities in turn are owed close to R170 billion by households, businesses and government for services rendered.

Households account for the majority of the debt - R120 billion - followed by businesses, which owe R25 billion, and government, which owes R10 billion.

"It is evident that there is clear link between ability of municipalities to pay debt – including that owed to Eskom and water boards – with the inability of municipalities to collect revenue from government, business and households for the services that we deliver," said Nkadimeng.

"The situation is becoming untenable for municipalities, constantly threatened with disconnections by Eskom and waterboards," she added.

Salga has recommended to municipalities to "aggressively and on an ongoing basis" use credit control measures – such as targeting government properties and businesses with disconnection if there is sufficient merit to do so and if it is in line with credit control policies, she said.

"It is not right for government and business to owe municipalities and not pay bills," Nkadimeng emphasised.

Secondly Salga has recommended that a "rigorous analysis" on debt be conducted and for smart meters to be installed to ensure the payment of electricity.

Speaking to members of the standing committee on public accounts on Tuesday, Eskom CEO Andre de Ruyter said that the power utility was disconnecting power from areas where payment is between 0% and 30%. He said Eskom could not afford to supply electricity at no charge. "When a service is supplied, a payment must be made," De Ruyter said.

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