Eskom has predicted it will lose R21 billion after tax in this financial year – yet it has written off R3.6 billion of the spiralling debt owed by Soweto.
Despite the write-off, the cumulative debt of power users in Soweto is R16.1 billion.
And, it was also revealed that the payment rates for electricity in the sprawling Johannesburg suburb were just over 16% – or lower than that for e-tolls payments, where an ongoing boycott by motorists means only 20% of the highway users actually pay.
The Soweto write-off – of interest – took place in September, two months before the power utility threatened to cut power to municipalities in the Free State, including Bloemfontein, for debts of just on R2 billion or less.
Eskom also needs to secure funding of R46 billion in 2020, with 64% of the funding for 2020 already secured.
Yet, Minerals Resources and Energy Minister Gwede Mantashe confirmed to parliament yesterday that government is still committed to buying electricity from the Grand Inga hydro-electric project in the Democratic Republic of the Congo and building a 2 000km transmission line which experts say could add further mega debt to Eskom and SA.
Eskom reported that invoiced municipal arrears debt increased by R5.2 billion since March 2019, to R25.1 billion, with only 78% of municipalities paying their bills, down from 93% four years ago.
The results also showed there was only a payment level of 44% for the top 20 defaulters, with Soweto’s invoiced small power user debt arrears (including interest) reduced to R16.1 billion (March 2019: R18 billion) after writing off in duplum interest of R3.6 billion.
According to Abrahams & Gross Attorneys, in duplum is “a common law rule that specifies that interest on a debt will cease to run when the total amount of arrear interest has accrued to an amount equal to the outstanding principal debt”.
Soweto is no longer Eskom’s biggest debtor when stacked up against the total of all the other defaulting municipalities, coming in at R17 billion, but it remained Eskom’s single biggest debtor.
The financials indicated Eskom would be unable to service debt and fund its capital expenditure to acquire, upgrade, and maintain physical assets.
“A cost-reflective tariff is required to ensure long-term financial sustainability,” the financials declared.