Many poor South African municipalities are drowning in debt to Eskom due to a culture of nonpayment by consumers, according to a report in the Sunday Times.
Maluti-a-Phofung, one of the poorest municipalities in the country situated in the foothills of the Drakensberg in the Free State, owes Eskom close to R3 billion, the report stated.
Co-operative governance minister Zweli Mkhize said the municipality was the worst electricity payments defaulter in the country, criticising the lack of payment by consumers and problems with ageing infrastructure.
Mkhize said that political instability in poor municipalities paired with a failure to perform basic legislative responsibilities has lead to the collapse of service delivery.
“Municipalities which enjoy political stability tend to be characterised by a more settled and mature political and administrative leadership,” his report stated.
Uplifting poor municipalities
In his presentation to the ANC’s national executive committee, Mkhize said he had appointed an advisory panel to find a solution to the growing debt of these poor municipalities.
Recommendations included a strong provision of basic services and a concerted effort to promote payment among residents in these areas.
Mkhize’s report also raised concerns of inadequate skills and political infighting within municipal councils, which he said weakens the ability to perform legislative tasks and creates an environment in which it becomes easier to commit fraud.
Following the loss of R1.5 billion in municipal funds invested in VBS Mutual Bank, Mkhize said municipalities should be transparent about planned capital projects and find alternatives to preserve financial stability.
The total debt owed to Eskom by South African municipalities has reached R14 billion, with delivery of services such as sewage and water also suffering in affected municipalities.
The energy regulator recently announced that Eskom plans to recoup the vast amounts of money lost in unbudgeted costs incurred in the 2014-2017 financial years.
The utility is able to raise power prices by 4.4% to regain the expenses through its regulatory clearing account, with standard tariff customers bearing the brunt of the R32.7 billion it aims to recover.
Eskom is also said to be affected by a coal crisis, where at least four of Eskom’s 15 coal-fired power stations had less than 10 days of coal on hand in September.