Municipalities owe Eskom R27 billion

Debt owed to Eskom by South African municipalities has increased to R26.8 billion by the end of December 2019, but it has seen improved payments coming from Soweto.

This was one of the figures reported by Eskom CEO Andre de Ruyter at the group’s State of the System media briefing on Friday (31 January).

De Ruyter said that the R26.8 billion owed by municipalities includes interest, while debt owed to the group from individual users is currently sitting at R16.5 billion.

“Positively, the payment rate in Soweto has improved from 12% to 23.9%. This is thanks government leaders who have come out and stated that users need to pay for the services they use,” he said.

At Eskom’s last reporting, Soweto was the biggest individual non-paying area, owing the power utility R19 billion. At the time, other municipalities owed R17.6 billion.

The worrying data prompted president Cyril Ramaphosa to address the issue of non-payment directly in one of his weekly letters to the nation, saying that the culture of taking and not paying had to come to an end.

“Boycotting payment for services had a place in apartheid, South Africa. It was an effective tool to mobilise communities against an unjust system. But it has no place in present-day South Africa. If public utilities like Eskom are to survive, then all users need to pay for the services they receive,” he said at the time.

Eskom is currently engaged in court battles with the country’s energy regulator, Nersa, in a bid to get the tariff hikes it needs to recoup losses made from non-payment.

The power utility applied for a 15% increase in tariffs each year for three years to 2021/22, to recover R219 billion. However, Nersa only granted an averaged 8% increase for each year.

According to Eskom’s legal counsel, Nersa had taken the R69 billion bailout given to Eskom at the time of its application as part of this recovery, and so excluded it from its calculations. It is accusing the regulator of not following its own methodology.

De Ruyter said that being before the courts against the energy regulator is “not where we want to be”, but talks were continuing to “get on a more sustainable footing when it comes to the determination of tariffs”.

Now read: South Africans must expect more load-shedding – Eskom CEO

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Municipalities owe Eskom R27 billion