Defaulters 'could drive paying public to revolt' | Fin24

Defaulters 'could drive paying public to revolt'

Feb 04 2015 06:30
Carin Smith

Cape Town - Eskom load shedding could make consumers who actually do pay for electricity feel they are getting the raw end of the deal and lead to a full-scale tax revolt similar to that already seen in the non-payment of e-tolls, economist Mike Schüssler of told Fin24 on Tuesday.

"Bad management and non-payers are making honest citizen pay more. That is not acceptable and undermines the morale of the paying public," said Schüssler.

"The government needs to step in and make huge examples of non-payers, but it is probably scared to do so. If this non-payment continues, it increases the risk that more and more people will not pay and illegal connections may then become bigger than legal connections."

Then local governments will not have money for basic services; Schüssler pointed out that already reports indicate that maintenance levels have dropped off.

About 1.4% of Eskom's turnover of R138bn is lost annually due to people "stealing" electricity. On top of that, municipalities owe Eskom about R4bn.

READ: Eskom loses R2bn per year to power theft

Schüssler estimates that if one adds up all the money Eskom "loses" for various reasons, like illegal theft of electricity and non-payment by municipalities, the rest of SA - that is those who do indeed pay for their electricity - should in fairness actually be paying about 7% less for it.

"If all the users paid, Eskom would have some more money to do things to avoid load shedding - not all the time but we would have it less often. Eskom would then also have more money for things like diesel," said Schüssler.

"If one looks at the total debt of municipalities that customers owe - from government to households - for over 90 days (when debt is considered bad debt) it is now R75bn and another R4bn is over 60 days old. That is 27.5% of total money going into municipalities."

He said if one were to add the problem municipalities have in getting money from users to pay for electricity and "unknown billions written off for the last decade or so", it is clear that non-payment of electricity, as well as for other services such as water, is a huge problem.

This is causing problems for all consumers as infrastructure building is the first thing that suffers, as is maintenance of the infrastructure.  

If these amounts owed or written off were to be collected, consumers would not not have to pay increases in municipal fees for nearly three years, according to Schüssler.

"Add the over R21bn written off over the last two years alone and we get beyond three years with no increases. That would provide relief to many honest citizens."

He said overall Eskom, municipalities and water boards are owed at least R85bn and have had over R21bn written off.

"Combined that is 3% of gross domestic product  and bigger relief to honest consumers than the 50% fall in the oil price," he said.

"Add e-tolls and traffic fines and the amounts would probably start heading to R120bn. That is more than four years of petrol taxes collected by government."

He said it is therefore no wonder that one hears more and more rumblings among the middle class about the non-payment of others.

ALSO READ: Zille: Break Eskom monopoly or it breaks SA

eskom  |  mike schussler  |  sa economy  |  energy  |  debt  |  etolls


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