NC municipalities need major intervention to tackle Eskom debt
4 July 2023
Northern Cape municipalities owe Eskom R4,2 billion in outstanding debt. This alarming increase from the R2.8 billion owed this time last year was confirmed by MEC of Finance, Abraham Vosloo, during the Provincial Treasury budget debate.
The debt of Sol Plaatje municipality, the biggest offender in the province, has almost doubled to R720 million.
The situation is out of control, despite promises from provincial government, including the Premier, to address the situation. The MEC of COGHSTA, Bentley Vass, acknowledged in his budget speech that government efforts to stop spiraling municipal debt have not yielded the desired results.
It is further worrying that by 20 June, which is already past the application deadline, only five Northern Cape municipalities had applied for Eskom debt relief. This, while there are 23 municipalities in the province that are failing to pay their debt.
The failure of more municipalities to apply is an indictment against management. The debt relief programme could have been their golden ticket to a total Eskom debt write-off over a three-year period if conditions are met.
Most Northern Cape municipalities don’t stand a chance at meeting the conditions for a funded budget, cost-reflective tariffs, and monthly issuing of consolidated municipal bills. They are also a long way off from achieving the required minimum of 80% collection of property rates and service charges from 1 April 2023 and a minimum of 85% collection from 1 April 2024.
The situation requires drastic intervention to prevent these municipalities from slipping further into debt. This includes support to boost revenue collection, ringfencing of funding for specific services and adherence to payment agreements with Eskom.
Meanwhile, the municipalities that did apply for debt relief are also going to urgently require support to ensure that they consistently meet the stringent requirements for debt relief, as the failure of a municipality to meet its obligations for even just one month, will nullify the debt relief deal, putting these municipalities back to square one. Given the weak capacity in most municipalities, the chances of this are high.
The DA has requested COGHSTA, together with Provincial Treasury, to present a workable plan to the legislature to show how they are going to ensure that they avail the required level of support to municipalities. The debt relief programme also requires provincial treasuries to monitor and certify municipal compliance monthly. We will therefore also request a joint quarterly briefing to the relevant portfolio committees.
This is not just about paying Eskom its dues, but about saving municipalities from complete collapse.
Issued by Michael Kaars, Provincial Spokesperson of COGHSTA, 4 July 2023
