Defaulting municipalities also fingered in AG's report

Cape Town – A number of municipalities that owe Eskom millions in unpaid electricity bills have also been fingered for irregular and wasteful spending.

In auditor general Thembekile Makwetu’s report on local government’s financial performance in the 2014/15 financial year, the municipalities in North West, Mpumalanga, Eastern Cape and Limpopo were among the main contributors to a significant increase in irregular spending over the past five years. 

Fruitless and wasteful expenditure shot up with R1bn since the 2010/11 financial year to R1.34bn and the wastage was most prevalent among municipalities in Mpumalanga, Eastern Cape, North West, Free State and the Northern Cape. 

The auditor general in June last year, when the report was released, said the financial health of 92% of municipalities in South Africa was either reason for concern or required serious intervention. Unauthorised, irregular and fruitless and wasteful expenditure amounted to a staggering R4bn in the period under review. 

READ: Financial health of municipalities a big worry 

“The most concerning indicators … were municipalities spending more than the resources they had available … not paying, or taking a very long time to pay their debt and creditors not being paid on time,” he said at the time. 

Kevin Mileham of the Democratic Alliance said in a statement that the current electricity debt situation at municipalities was a “crisis long in the making”. 

“Despite every indication in audit reports that these municipalities were sinking, neither the ANC, nor the Provincial Departments of Cooperative Government and Traditional Affairs, nor the department’s minister Des van Rooyen, did anything about it.” 

Meanwhile, Public Enterprises Minister Lynne Brown repeated her call that Eskom should afford indebted municipalities a slight breather to pay their arrears before switching off the lights.

READ: Brown: Don't switch municipalities' lights off yet

Brown wants Eskom to allow municipalities until month-end to clear their outstanding arrears.

Early in January, the North Gauteng High Court dismissed an application to prevent Eskom from cutting off supply to municipalities which owed the power utility R10.2bn in debt.

The power utility has however suspended planned supply interruptions at some defaulting municipalities after reaching payment agreements with them.