{"id":585333,"date":"2025-03-05T09:09:32","date_gmt":"2025-03-05T07:09:32","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=585333"},"modified":"2025-03-05T09:09:37","modified_gmt":"2025-03-05T07:09:37","slug":"r95-billion-eskom-headache","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/government\/585333-r95-billion-eskom-headache.html","title":{"rendered":"R95 billion Eskom headache"},"content":{"rendered":"\n

Eskom’s plan to use an active partnering approach to help municipalities indebted to the entity get back on their feet does not address many systemic issues, resulting in the entities owing the utility over R95 billion.<\/p>\n\n\n\n

This is according to the South African Local Government Association’s (Salga) senior advisor for electricity, Nhlanhla Ngidi, who told<\/a> Cape Talk that South Africa will have to address these issues to give these municipalities any chance of stability in the future.<\/p>\n\n\n\n

This follows Electricity and Energy Minister Kgosientsho Ramokgopa telling Parliament<\/a> that Eskom will implement the Active Partnering Approach to “improve municipal electricity businesses while maintaining public ownership.”<\/p>\n\n\n\n

“The minister’s response to Parliament is but one of the many solutions we are currently considering for the necessary restructuring of municipalities as well as Eskom,” Ngidi said.<\/p>\n\n\n\n

“However, there is a bigger issue we need to tend to that cannot just be resolved through active partnering.”<\/p>\n\n\n\n

Ngidi said municipalities face a number of systemic issues that need to be addressed to manage the debt crisis properly.<\/p>\n\n\n\n

He said municipalities’ debt to Eskom is estimated to reach R109 billion by the end of the month, while South Africans’ non-payment of municipalities will reach R360 billion around the same time.<\/p>\n\n\n\n

The most recent number reported by Eskom was R95.4 billion<\/a> at the end of 2024.<\/p>\n\n\n\n

“The first issue is around the funding model of municipalities that need to be restructured,” Ngidi argued.<\/p>\n\n\n\n

He says that municipalities would typically rely on collecting revenue from citizens rather than from the fiscus to generate revenue.<\/p>\n\n\n\n

However, this no longer works as the funding model assumes that revenue generated from electricity sales will cross-subsidise other municipal services that do not generate money but are mandated to be delivered, such as parks and recreation and cemeteries, Ngidi says.<\/p>\n\n\n\n

“Then there’s the issue of the user pays principle, which we are moving away from as a country. Where people are given the responsibility of paying for what they owe,” he says.<\/p>\n\n\n\n

“This is a social issue that we need to deal with. It’s not just the municipalities that are failing.”<\/p>\n\n\n\n

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Nhlanhla Ngidi, senior advisor for electricity at Salga<\/figcaption><\/figure>\n\n\n\n

However, he does say that the active partnering approach is necessary for those municipalities that have reached the point of no return concerning debt owed to Eskom.<\/p>\n\n\n\n

The approach involves the municipality remaining the licensed distributor of electricity. However, it enters an agreement allowing Eskom to assist with billing, revenue collection, infrastructure maintenance, and reticulation services.<\/p>\n\n\n\n

The municipality entering the agreement also requires its electricity accounts to be separated from other municipal finances and the free basic electricity grant to be administered by the state utility.<\/p>\n\n\n\n

Additionally, Eskom will help precincts invest in infrastructure upgrades through municipal borrowing, grants, and Public-Private Partnerships.<\/p>\n\n\n\n

However, Ngidi notes that through this process, municipalities must be capacitated to deliver and collect the revenue from electricity service delivery rather than being a hostile takeover by Eskom. <\/p>\n\n\n\n

Ramokgopa pointed to the case study of Maluti-a-Phofung Municipality in the Free State, which had one of the worst-performing electricity distribution administrations, as proof of the initiatives’ effectiveness.<\/p>\n\n\n\n

This included massive arrears to Eskom, severe infrastructure neglect, and over 60% of customers consuming electricity illegally.<\/p>\n\n\n\n

However, by implementing the Active Partnering Model, Eskom helped Maluti-a-Phofung to recover R2 billion in outstanding payments and reduce electricity theft and illegal connections.<\/p>\n\n\n\n

Eskom also assisted the municipality in reducing unplanned outages by repairing infrastructure and investing in meter audits to improve billing accuracy.<\/p>\n\n\n\n

Maluti-a-Phofung is no longer adding to its Eskom arrears, and revenue from paying customers is being used to fund infrastructure upgrades.<\/p>\n\n\n\n

Ramokgopa noted that the programme has also been implemented in the Modimolle-Mookgophong, Thabazimbi, and Bela Bela municipalities and will soon be extended to others in the Free State and North West.<\/p>\n","protected":false},"excerpt":{"rendered":"

While Eskom’s active partnering approach may help municipalities get back on their feet in the short term, several issues need to be addressed to create proper stability in the long run.<\/p>\n","protected":false},"author":341175,"featured_media":569243,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18668],"tags":[181,91255,62922,41097,41099],"class_list":["post-585333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-eskom","tag-kgosienthso-ramokgopa","tag-municipal-debt","tag-nhlanhla-ngidi","tag-south-african-local-government-association-salga"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/585333"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341175"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=585333"}],"version-history":[{"count":8,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/585333\/revisions"}],"predecessor-version":[{"id":585498,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/585333\/revisions\/585498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/569243"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=585333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=585333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=585333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}