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'Political solution' needed as council payments to Eskom plummet, Scopa hears

Nov 13 2018 17:22
Khulekani Magubane, Fin24

Parliament’s Standing Committee on Public Accounts has urged Eskom and the high-level panel tasked with resolving the power utility’s municipal debt crisis to seek a "political solution" to the problem.

Scopa heard from Eskom and the panel in Parliament on Tuesday.

Among other things, MPs heard that some municipalities were in a perpetual debt spiral due to a lack of rate collection capacity, little revenue base and variance in tariff systems, many of which are dysfunctional.

The submission from the high-level panel showed that the payment levels among the top 20 defaulting municipalities decreased from a high of 91% in March of 2016 to 57% in March of 2018.

The top 20 defaulting municipalities accounted for 80% of the overdue debt, growing by 217% since 2015.

Minister of Cooperative Governance and Traditional Affairs Zweli Mkhize came into the meeting while it was in progress, saying there was a process in place to address prepaid revenue collection systems and municipalities.

"During the last meeting we had, the committee challenged us to find a solution. With sufficient background information, we still have to make the conclusions that Cabinet can apply its mind to and table the matter," said Mkhize.

Mkhize said there was no way that the impasse between municipalities and Eskom would be resolved in court.

The debt quandary would be resolved through a "political solution", he said.

Representing the high-level panel, Financial and Fiscal Commission boss Daniel Plaatjies said the high-level panel recommended a review of various billing related protocols, policies and contracts to verify the relevance and completeness of the billing value chain.

"A detailed cost of supply study is imperative in addressing the regulated, expected sustainability guidelines associated with electricity service provision," said Plaatjies.

Eskom’s group executive for customer services Ayanda Noah told Scopa that Minister Mkhize requested a three-month moratorium on supply interruptions as a measure to discourage non-payment.

"The growth in overdue debt of R3.41bn during the past six months is unsustainable. Overdue debt by the top ten municipalities grew by R2.26bn. Eskom will continue to participate in the inter-ministerial task team process and strive for finding solutions," said Noah.

While Soweto does owe Eskom R15bn, more than what scores of municipalities owe the power utility, this does not strictly constitute a debt from the Johannesburg Metropolitan Municipality as Eskom serves the township directly, while other suburbs in the city are serviced by City Power.

Scopa member for the Inkatha Freedom Party Mkhuleko Hlengwa said during a debate in the National Assembly on the Division of Revenue Bill, that there was too much "egotistical spending" on national government and enough spent on helping local governments develop.

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zweli mkhize  |  parliament  |  eskom


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