Most municipalities flouting Eskom debt relief terms, warns utility

Embattled power utility Eskom has revealed that 87% of municipalities approved for National Treasury’s municipal debt relief program are failing to meet the conditions required for debt write-offs, with only 10 out of 71 municipalities remaining compliant.

The municipal debt relief program was introduced by National Treasury in 2023 to help municipalities reduce the large debts they owe Eskom. It offers debt write-offs if municipalities pay their current bills consistently and meet certain conditions.

Despite measures like reducing interest and payment plans, Eskom says municipal debt has kept growing and now stands at about R94.6 billion and warned that ongoing non-compliance poses a significant risk to its liquidity and overall operations.

The state-owned power utility made these disclosures while briefing Parliament’s Standing Committee on Appropriations on its finances on Tuesday.

"So this covers the national debt relief program. So just in summary, 71 municipalities, were approved. And right now, we are only sitting with 10 compliant, municipalities,". Rajen Naidoo, Eskom’s General Manager for Finance said.

"The sad situation that we find ourselves in is that even municipalities that were approved did not even honour their current bill, some of them from month one of the program. So it's it it's only these 10, municipalities if they are compliant, in terms of how the program works,".

Eskom CFO Calib Cassim emphasised that the purpose of the Eskom Debt Relief Amendment Bill was to place power utility on a sustainable financial footing, reducing the need for future bailouts from the National Treasury.

Committee Chairperson Mmusi Maimane stressed that Eskom plays an important role and that its money problems and the growing municipal debt are key issues for the committee when deciding on funding.

“When we examine the various pieces of legislation under consideration by this committee, it is undeniable that Eskom remains a pivotal component. The state of Eskom’s liquidity, along with serious concerns raised by municipalities around debt servicing are critical factors, especially in light of the appropriations made to Eskom.”

The committee further said the lack of urgency in addressing underperforming and financially distressed municipalities, many of which are unable to service their debts to Eskom, is a major contributor to Eskom’s debt burden.

mthobisi.nozulela@iol.co.za

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