Eskom confirms Gauteng Premier lied about scrapped debt

Power utility Eskom has confirmed that it has not processed any electricity debt write-offs. Its statement comes several days after Gauteng Premier and ANC Gauteng chairman Panyaza Lesufi made claims to the contrary.

Lesufi came under fire from civil society and at least one opposition political party earlier this week after a video emerged showing him telling a room full of people that “all” outstanding historical debt owed to Eskom by direct customers, including municipalities, had been scrapped.

“All the people that were owing Eskom for years…All those debts have now been officially scrapped,” Lesufi stated.

“We’ve [the ANC] championed that. We are starting on a new slate, all of us.”

Lesufi clarified that money residents owed to municipalities was a separate matter, but said that municipalities could pass on the benefits, suggesting their debts to Eskom had also been written off.

“We are encouraging the municipalities that are run by the ANC to do the same and scrap the debts of everyone that is owing,” he said.

“We are serious of winning these elections.”

Several X users — including well-known South African account @Goolam — reposted the video and teased that people should not pay their outstanding Eskom bills.

Soon after the video surfaced, MyBroadband asked Eskom whether there had been any electricity debt write-offs, as Lesufi claimed.

In a circumspect statement on Thursday, Eskom put the matter to rest. “Eskom has not processed any debt write-offs at this stage,” the utility said.

It should be noted that Eskom did not answer our questions directly — it issued a general statement highlighting the negative impacts that arrear municipal debt had on its business.

“As at end of March 2023, arrear municipal debt was at R58.5 billion, a substantial 30% year-on-year increase from R44.7 billion in March 2022,” Eskom said.

“The top 20 defaulting municipalities account for about 78% of total arrear municipal debt.”

Eskom said its efforts to address this issue did not yield the desired outcome, and the debt has continued to escalate.

The utility said it had mechanisms in place to assist its direct residential customers facing challenges in settling their accounts in full.

“However, as it is the case with any business, customers who do not pay their monthly accounts and fail to engage leave Eskom with no option but to implement credit control management processes, including interruption of services,” Eskom said.

“Payment for services is critical for the sustainability of any service provider, including Eskom. Therefore, Eskom urges all South Africans to pay for services they consume.”

Municipal debt relief progress explained

Eskom said a high-level intervention and continuous, coordinated multistakeholder approach was required to deal with the mounting debt.

When it comes to debt owed by municipalities, Eskom is pinning its hopes on the Municipal Debt Relief programme facilitated by the National Treasury.

Eskom believes this scheme can improve its cash flow.

The programme aims to support municipalities in dealing with their historical debt challenges, provided they can meet 14 stringent conditions.

Eskom said most municipalities in arrears have applied to National Treasury for the debt relief.

“52 of these municipalities have received approval from National Treasury with six municipalities granted conditional approvals,” Eskom said.

Eskom group executive for distribution, Monde Bala, said although this was encouraging, some municipalities had not responded positively.

“Eskom continues to engage these municipalities and National Treasury,” Bala said.

The Municipal Debt Relief has conditions municipalities must fulfil over the next three years to qualify for a full electricity debt write-off.

Eskom would be required to process the first portion of the debt write-off only after municipalities have met the set conditions to the satisfaction of Treasury for twelve consecutive months.

The conditions include:

• Maintain a minimum average collection and use electricity and water as collection tools.
• If the municipality collects less than 80% of its revenue during any quarter, it must demonstrate that the failure relates to Eskom-supplied areas, technical engineering inability to restrict water supply, or Eskom SDA refusal.
• It must ring-fence all electricity, water, and sanitation revenue collected. It must pay the Eskom current account and the bulk water current account before any other monthly payments.
• Progressively install smart prepaid meters. All new connections must be smart prepaid.
• There is a 3-year restriction on any municipal borrowing.
• Phase-in cost-reflective tariffs.
• Ensure spending fully aligns with realistically anticipated revenue collection.

Eskom reiterated that the Municipal Debt Relief programme applied to municipalities and excluded other customer categories.

MyBroadband asked the ANC in Gauteng and the Office of the Premier to respond to Eskom’s statement but did not immediately receive feedback to our queries.

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