Government needs to intervene with municipalities’ R25 billion utilities debt

21 November 2018

The Democratic Alliance (DA) can reveal that various municipalities owe Eskom and numerous water boards a combined amount of over R25 billion. This shows the failure of local municipalities and the mismanagement of their finances under the ANC government.

We demand urgent intervention in failing municipalities in order to ensure that their financial crisis is turned around. We, therefore, call on National Treasury to urgently provide financial recovery plans for these failing municipalities, including a monthly dashboard that shows how much each municipality owes to Water Boards and Eskom, as well as the progress that’s being made to address the debt.

The top 12 worst offenders owe a total of R5.6 billion to water boards. As a result, water boards cannot refurbish the water services infrastructure. The biggest offender is the Matjhabeng Municipality which owes Sedibeng Water Board R2.4 billion. The total owed by all municipalities to water boards is an eye-watering R8.6 billion.

When it comes to Eskom, the top 20 defaulters owe a total of R11.6 billion and the total amount owed to Eskom by all municipalities now amounts to R17 billion.

Some municipalities owe both Eskom and water boards. The major culprits are the Matjhabeng, Emfuleni, Govan Mbeki and Nala municipalities.

Emfuleni, which we visited today, owes R638 million to water boards alone and a further R872 million to Eskom. Thus, the combined amount owed by Emfuleni is a shocking R1.5 billion for water and electricity.

The viability and sustainability of these waterboards and of Eskom are being threatened as the overall debt levels are increasing. This is despite Cooperative Governance and Traditional Affairs Minister (COGTA) Minister Zweli Mkhize establishing the Inter-Ministerial Task Team (IMTT) on electricity reticulation and distribution.

This R25 billion debt shows the absolute collapse of financial management, leadership and debt control. It demonstrates that Minister Mkhize’s IMTT, which was supposed to address the collapsing state of local governance, was just a talk shop with no real action.

Treasury’s recovery plans must be backed by Public Enterprises Minister Pravin Gordhan and Water and Sanitation Minister Gugile Nkwinti providing a strategy on how Eskom and the affected water boards can engage with COGTA in order to find viable solutions to restore basic services to our people.

The failing ANC government’s chronic financial mismanagement and corruption have crippled our communities. Residents face possible power outages and water shortages due to the ANC’s failure in government.

This is not only an inconvenience for the residents but also has consequences for local economic development.

The failing ANC is incapable of providing our people with good governance and efficient service delivery. The DA is the only party that can bring change that speeds up the delivery of services to all South Africans.

Issued by Kevin Mileham, DA Shadow Minister of Cooperative Governance and Traditional Affairs, 21 November 2018