Tshwane owes Eskom R3.2 billion, mayor says load shedding affecting city’s funding model

The City of Tshwane and Ekurhuleni municipalities owe Eskom a combined R4.7 billion as of 31 August 2023, the power utility announced on Wednesday.

Due to erratic payments, Tshwane owes Eskom about R3.2 billion, which has accumulated over July and August 2023. Ekurhuleni’s debt is currently just under R1.5 billion.

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“The payment patterns by both municipalities have deteriorated to concerning levels that further threaten Eskom’s liquidity, financial performance, and sustainability. The erratic payments by the CoT dating back to 2022 are alarming,” said Eskom.

Tshwane’s financial crisis

Tshwane mayor Cilliers Brink said it was not a secret that the city was in a financial crisis and that it was behind on its payments to Eskom.

“We have been consistent and clear in conveying the reality of our financial situation and stipulating the difficult decisions that need to be carried out by Council, the mayoral committee and City management to get out of our financial distress,” said Brink on Wednesday.

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He said after the Council adopted the City’s budget in June, underfunded by at least R3 billion, it also approved a funding plan that includes measures to achieve a funded status within three financial years.

One of these measures is to seek exemption from salary increases, even in the face of a violent, unprotected strike.

Tshwane has been in chaos since some of its employees embarked on an unprotected strike since July over the 5.4% salary increase agreed upon at the local government bargaining council.

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Brink says Tshwane has no money for the increase, which would cost an additional R600 million.

Load shedding

The mayor said on Wednesday that one of the reasons for the city’s financial crisis is the loss it is making on the sale of electricity.

“This year, the country has had more load shedding days than ever before. This wreaks havoc, not just on the maintenance of our network, leading to heightened wear and tear, but also affects our funding model,” he said.

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“During load shedding, we cannot sell electricity and therefore struggle to cover fixed costs associated with the operation of our network.

“The tariff approved by the National Energy Regulator of South Africa (Nersa) for the resale of electriciy also does not cover our costs. Thus, we are finalising a cost of supply study to inform our submission to Nersa for the next financial year.”

The City is also working on becoming more independent of Eskom.