Reports that Eskom had posted a financial loss of R29bn (the largest in its 100 year history), while not entirely unexpected, must surely raise questions about the R60bn outstanding to the power utility from municipalities.
More specifically, what difference would it have made to Eskom operationally and financially had this money been available to them?
The saga of unpaid municipal Eskom bills is frankly, a complete conundrum for me. How this state of affairs could be allowed to exist and fester and reach the levels that is has, particularly in the face of Eskom’s deteriorating financial position, is mind-boggling. It represents a patent lack of commitment, oversight and understanding of basic finances. This is all exacerbated by the fact that a large proportion of the R60bn has already been collected from customers in the defaulting municipalities, and willfully withheld from Eskom. The utility’s ability to force payment by withholding supply has been directly curtailed by government ostensibly for social reasons, but more likely for fear of political fallout (read loss of support for the ruling party). But instead of trying to instill more discipline in municipal treasury departments, Finance Minister Godongwana announced in his medium term budget policy statement that up to 97% of their debt will be written off over 3 years, on the condition that strict conditions are met: those conditions being enhanced revenue and credit controls, and maintaining monthly payments to Eskom going forward. In other words, doing what any fiscally responsible organisation ought to be doing as a matter of course. Clearly the ‘kid glove’ approach to collapsing municipal finances by National Treasury is set to continue under this administration.
While Eskom has been the master of its own downfall in many ways, there can be no doubt that the State as its only shareholder, has aided and abetted its demise by willful inaction, and a limp-wristed response to issues that could have contributed to a more rapid turnaround, or a slowing of the slide to the bottom at best. Some of the other financial decisions that have crippled Eskom are the over-ruling of the zero wage increase decision by the Board last year, and more aggressive steps to recover outstanding debt from the residents of Soweto for example, who contribute an additional R6bn odd to their receivables.
At an operational level, as malfeasance around sabotage to equipment and rampant coal theft were exposed, the response of the security cluster has been nothing but underwhelming, indicating again, that the situation at Eskom has become less of a national priority and more of a political football.
Vijay Naidoo is the CEO of the Port Shepstone Business Forum. He writes in his personal capacity. The views expressed are the author’s own and do not necessarily reflect those of this publication.
HAVE YOUR SAY
Like the South Coast Herald’s Facebook page, follow us on Twitter and Instagram
