Over R63bn owed: Eskom’s municipality debt crisis continues

Spiralling debt by South African municipalities continues to cripple Eskom’s distribution capacity and suffocate any attempts to address distribution challenges, especially in communities that still battle power cuts.

In his weekly briefing on Sunday, electricity minister Kgosientsho Ramokgopa said municipal debt currently stands at more than R63 billion, with the top 20 municipalities accounting for 77% of that amount.

He added the combination of the failure to collect revenue, illegal connections and a decline in sales of electricity to consumers due to theft meant municipalities’ ability to pay their debts to Eskom was worsening, while their inability to invest in electricity infrastructure leads to issues such as load reduction. 

“These communities are subjected to a number of challenges. They are subjected to load reduction,” he said.

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“Communities in other parts of the country are going for longer periods of time without electricity, not because of load shedding but because of these challenges.”

“There are a number of municipalities that have entered into some agreements. They fail to live up to those agreements because essentially their revenue base has been eroded. They are unable to sustain those agreements.”

The minister said once the issue of load shedding was resolved, some communities will continue to suffer power outages due to the failing infrastructure. 

“The comfort we want to give to communities is that we are attending to all of these problems. We are not waiting to resolve load shedding and much later we go and address the distribution side,” he added.

“We are addressing the entire ecosystem so that we can have a full proof comprehensive solution on the resolution of the electricity problem in the country.”

Failure to pay Eskom also undermined the entity’s ability to service and maintain the electricity distribution network and resulted in the replenishment of budgets being depleted on fixing repeat breakdowns of sub-stations and other transmission units.

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“We have to do something to resolve this. We are in discussions with colleagues from distribution, from the national treasury and from the South African Local Government Association (Salga) to try and address the debt of the municipalities.”

“The annual growth of debt is going to increase exponentially. This is going to continue to place a burden on Eskom,” he noted.

“Demand for replacement parts could not be planned for because we don’t know at which point a transformer is going to fail as we don’t know who is connecting illegally.”