R1.5 billion Eskom debt denied as City’s financial woes worsen

With Eskom announcing the City of Ekurhuleni (CoE) owed it R1.5b and the council failing to discuss its finances, Action SA warned that the CoE might be placed under administration.

Germiston City News/Bedfordview Edenvale News previously reported that despite the desperate need for service delivery in the CoE, the council failed to debate this matter at its ordinary council meeting on September 28.

The DA submitted a motion to discuss finances in the morning.

Other parties, including Action SA, supported it and yet they postponed it until later in October.

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The motion stated that the worsening economic growth of the country and the impact of intense load-shedding on revenue collection require an urgent debate on the city’s finances.

The opposition planned to discuss the current collection rate of the city’s liquidity (cash on hand) of R438m, the city’s debt ratio amounts owed in loans, and the monies owed to suppliers and contractors amounting to over R3b.

Eskom has since released a statement stating CoE’s debt is currently just under R1.5b, adding the municipal electricity debt in Gauteng continues to increase.

The power entity added the City of Tshwane (CoT) and CoE jointly owed Eskom R4.7b as of August 31 this year.

Siyanda Makhubo, from ActionSA Ekurhuleni caucus leader, said according to Eskom, the payment patterns by both municipalities have deteriorated to concerning levels that further threaten Eskom’s liquidity, financial performance and sustainability.

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“Eskom is concerned about the entrenched practice by the CoE of settling its account late over the past six months.

“Despite all the avenues Eskom has explored to recover what is due to the organisation, both municipalities have failed to fully honour their payments and to comply with their electricity supply agreements,” said Makhubo.

She accused the speaker of the council of blocking the motion to protect the MMC of Finance Clr Nkululeko Dunga, who she accused of leading the city into financial collapse.

ActionSA has since written to the speaker, Nthabiseng Tshivhenga, to consider this an urgent matter and concede to call for a special council meeting to ensure residents are informed of the true state of affairs of CoE.

“Ekurhuleni owes its creditors R4b. This includes the Eskom debt, R117m to Ekurhuleni Water Care Company, R2.5b to outsourced contractors and R174m owed to Rand Water.

“Failure to honour these obligations risks Ekurhuleni being placed under administration for the first time.

“Mayor Sivuyile Ngodwana must tell the residents of Ekurhuleni why they must trust CoE with their rates and taxes when the city fails to honour its financial obligations,” said Makhubo.

She said her party demands that Ngodwana, Dunga and the city manager Dr Imogen Mashazi admit the current handling of finances and mechanisms put in place by the ANC-EFF coalition are not working.

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The ANC in Ekurhuleni also expressed its concerns with the current state of the municipality’s finances.
ANC Caucus Whip Ald Jongizizwe Dlabathi said the city was close to bankruptcy.

Dlabathi said the city’s revenue collection had severely deteriorated.

“We are simply in a state of hand-to-mouth as a city and it presents a dire financial state. We have consistently called for a more effective revenue approach to prevent the city from bankruptcy,” said Dlabathi.

Dunga was adamant in his previous response to the Kempton Express when asked about the debt owed to Eskom.
“We don’t owe Eskom.

The biggest challenge in the city’s revenue is Eskom because Eskom is the catalyst of our revenue.

“We rely on Eskom and that has been a challenge for our residents and businesses on collection as they are affected by load-shedding,” said Dunga.