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Electricity and Energy Minister Kgosientsho Ramokgopa warned that Eskom is at risk of collapse if its debt problem is not addressed.<\/p>\n
Ramokgopa referred to South African municipalities owing Eskom R78 billion, which is increasing at an alarming rate.<\/p>\n
He said this problem must be urgently addressed to protect the power utility\u2019s ability to fulfil its mandate.<\/p>\n
He said a large chunk of this debt is irrecoverable. \u201cThere\u2019s no possibility under the sun that we will collect that R78 billion,\u201d he said.<\/p>\n
Eskom needs this money to reinvest in its infrastructure and perform maintenance to improve its generation fleet\u2019s performance.<\/p>\n
\u201cMunicipalities must pay that money. However, on an objective ground, they simply don\u2019t have the means to pay,\u201d he said.<\/p>\n
Ramokgopa said the current debt trajectory owed to Eskom threatens the power utility\u2019s future existence.<\/p>\n
\u201cTo give you the magnitude of the problem, if we don\u2019t resolve it, our projection is that at the current rate, by 2050, Eskom will be owed R3.1 trillion,\u201d he said.<\/p>\n
\u201cEskom will collapse. Generation capacity is going to be compromised. So, we must resolve this problem.\u201d<\/p>\n
Ramokgopa said the rising municipal debt burden is the most urgent task Eskom is confronting.<\/p>\n
\u201cIt is municipality-related, but we can\u2019t fold our arms. We need to help them from a technical point of view,\u201d he said.<\/p>\n
He emphasised that continued non-payment is affecting Eskom\u2019s ability to address distribution infrastructure needs \u2013 leading to the implementation of load reduction.<\/p>\n
Load reduction is implemented in areas when the demand is higher than the infrastructure is able to handle.<\/p>\n
\u201cWhen that distribution infrastructure fails to provide electricity to 50 houses, there\u2019ll be 10 to 20 houses that have been paying diligently, but they are collateral damage,\u201d he said.<\/p>\n
\u201cWe must protect the interests of Eskom as a going concern and ensure that municipalities can collect revenue.\u201d<\/p>\n
\u201cThe biggest victims of all of that is the end consumer and, by definition, is the South African economy.\u201d<\/p>\n
The Minister said the department, together with municipal leaders, will address the challenge of electricity affordability and access to allow municipalities to collect revenue.<\/p>\n
The Outlier has produced an analysis of Eskom\u2019s municipal debt, and the numbers paint a bleak picture.<\/p>\n
Since 2018, the debt owed by municipalities to the national power utility has increased nearly sixfold.<\/p>\n
In 2018, municipalities owed Eskom R13.6 billion. Fast forward six years, and the debt ballooned to R78 billion.<\/p>\n
Municipal debt increased by R19.5 billion over the last year, more than the total debt in 2018.<\/p>\n
Eskom and the Treasury are working with 28 municipalities on a debt relief programme, which collectively amounts to R26.7 billion.<\/p>\n
The chart below, courtesy of The Outlier, shows Eskom\u2019s municipal debt increase over the last seven years.<\/p>\n