18 broke Eastern Cape municipalities owe Eskom over R2bn for bulk electricity

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  • Eighteen of the 38 municipalities in the Eastern Cape owe Eskom more than R2 billion for bulk electricity supply.
  • Eskom said despite offering payment arrangements to accommodate the struggling municipalities, these were not always honoured by some of the councils.
  • Residents staying within the municipalities have been enduring rolling power outages as Eskom cuts electricity supply to force the councils to pay up.

Eighteen of the 38 municipalities in the Eastern Cape owe Eskom an outstanding debt of more than R2 billion for bulk electricity supply.

This was revealed by Cooperative Governance and Traditional Affairs MEC Xolile Nqatha this week who responded to written legislature questions asked by DA MPL Vicky Knoetze.

Nqatha revealed the collective Eskom debt of Eastern Cape municipalities had reached a shocking R2.157 billion, of which R1.322 billion was in excess of 90 days.

Some of these municipalities have allowed their debts to balloon out of control by not paying.

Municipalities get bulk electricity supply from Eskom and sell it to consumers at hiked prices.

Nqatha's written reply showed eight municipalities, which were the worst defaulters, have fallen deeper in arrears.

The municipalities are: 

  • Enoch Mgijima Local Municipality in Komani – R457m
  • Walter Sisulu Local Municipality in Aliwal North – R294m
  • Raymond Mhlaba Local Municipality in Fort Beaufort – R205m
  • Inxuba Yethemba Local Municipality in Cradock – R193m
  • King Sabata Dalindyebo Local Municipality in Mthatha– R165m
  • Dr Beyers Naude Local Municipality in Graaf Reinet – R141m
  • Makana Local Municipality in Makhanda – R37m
  • Amahlathi Local Municipality in Stutterheim – R 25m

The DA is calling on the provincial government to step in and assist municipalities, saying they could not continue to dip deeper into their equitable share to pay their debts. 

In a statement, Knoetze said Nqatha was bound by the Section 139 (5) of the Constitution and had no choice but to impose a recovery plan to ensure that each of these municipalities met their financial commitments.

"The provincial government needs to step in and take over where their ANC deployed cadres have failed. A capable state would never have allowed the debt to reach these levels in the first place.

"These municipalities have proven that they simply cannot effectively deal with their runaway Eskom debt. Despite this, there have been no consequences for those municipal officials who allowed this situation to get so out of control."

She added in sharp contrast, the DA-run municipality of Kouga owed Eskom nothing and was in the process of establishing biomass and solar plants, with the vision of moving most of the municipality off the Eskom grid.

"This use of renewable and green energy generation methods is forward-thinking and innovative. It will soon free the people in Kouga from the constant Eskom loadshedding sword hanging over their heads."

Knoetze said Nqatha must immediately take action and arrange an urgent meeting with provincial treasury to discuss a plan of action, formulate a workable solution to eliminate this debt, and draw up long-term solutions to ensure future debt stayed under control.

"The plan should include the ring-fencing of all revenue collected through electricity sales for the servicing of Eskom accounts and the maintenance and upgrading of municipal infrastructure. This plan must then be imposed upon the respective municipalities, in line with section 139 [5]," she added.

People staying within the municipalities have been enduring rolling blackouts as Eskom cuts electricity supply at the defaulting municipalities to force them to pay their debts.

On Friday, Eskom spokesperson Zama Mpondwana said the implementation of electricity supply interruption to defaulting municipalities through the PAJA process was only done as a last resort.

"Eskom confirms the alarming and escalating local municipal debt on bulk electricity supply in the Eastern Cape. Eskom is in legal disputes with some of the local municipalities in the province and is engaged in regular discussion with defaulting municipalities in an effort to arrange and resolve payment glitches outside the court of law."

Mpondwana added despite Eskom offering payment arrangements to accommodate struggling municipalities, these were not always honoured by some municipalities.

Nqatha said: "The provincial government has been the first to assess and identify municipalities that are facing financial difficulties due to historical debts and low levels of revenue as result of rural nature of the province.

"We have since 2019 approached national government to provide support to those municipalities. As a result, a detailed assessment has been done by National Treasurer and we are working together to find a solution which is not easy under the fiscal constraints facing the country."

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