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Johannesburg – Failing municipal infrastructure is one of the obstacles to Eskom’s distribution network, according to the state enterprise.
Speaking at the state of the system briefing at Megwatt Park in Sunninghill, on Tuesday, interim CEO Matshela Koko explained that power generation was no longer a problem. However, distribution is a new challenge for the power utility.
“I do not sleep at night because of what I see, feel and experience within the 54% of distribution customers who are not supplied by the Eskom network,” said Koko. Eskom’s distribution accounts for 46% of the South African customer base, the rest falls on metros and municipalities.
Koko said he received calls from customers who have businesses, asking to migrate to Eskom’s distribution network over the liabilities incurred by power interruptions.
Koko highlighted challenges to distribution, this includes under investment in electricity infrastructure, which was at R68bn in 2014. Inadequate revenue management systems were also a problem. Also a number of distributors are in violation of distribution license conditions.
He added that utilities such as municipalities also consistently defaulted on their negotiated payment arrangements.
However, Koko extended his gratitude to the premiers of Free State, North West and Mpumalanga for “really coming to the party”. “Every time we engage I sense we will end up in the right direction,” he said.
He expressed his disappointment over being taken to court, after Eskom threatened to interrupt power supply to defaulting municipalities. “I was taught by my mother to honour your agreements. When we make an agreement it is about integrity, honoring it. What saddens me is that agreements we made with municipalities, they are not honored.”
He said failure to collect revenue from municipalities was hindering Eskom’s opportunities to acquire investments. “Investors say why must we trust you with our money when you fail to recover money from your municipalities?”
ALSO READ: Municipalities default on Eskom bills despite intervention
Since implementing the Promotion of Administrative Justice
Act (Paja) in November 2016, Eskom has recovered R979m in debt.
“Everyone knows we can’t borrow money to generate electricity if people do not pay for it. We borrow money to create assets, like Medupi.” He added that assets were listed in the books of the business. Writing off this “debt” would have implications for the balance sheet where this debt is listed as assets, he explained.
Public enterprise Minister Lynne Brown recently intervened in the situation with municipalities and asked Eskom to give them more time to clear their arrears.
“Turning off the power supply does not only impact on individual ratepayers and municipalities, it has potentially disastrous effects on businesses, and therefore jobs," she said in a statement.
ALSO READ: Brown: Don't switch municipalities' lights off yet
Brown wants Eskom to allow municipalities until month end to
clear their outstanding arrears.
The power utility reported an improvement in its operational performance, with energy availability up 77.3% from the previous quarter’s 70.3%. This improvement has led to 3103MW being added to the national grid.
Eskom is capable of meeting demand until 2021, due to the group’s operational surplus capacity at 5600MW this financial year, explained Koko.
Currently Eskom has connected 162 104 new customers to the grid, in addition to its 150 747 existing customers. The power utility’s target is 207 332 connections by the end of this financial year in March 2017.
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