Mkhize slams municipal debt to Eskom as unacceptable

Cape Town – It is unacceptable that municipalities are heavily indebted to Eskom and water boards, says Minister of Cooperative Governance and Traditional Affairs (CoGTA) Zweli Mkhize.

As at December 31, 2017, the total for bulk services owed by municipalities was R23.6bn. This comprises R16.2bn for electricity and R7.4bn for water, Mkhize told Parliament on Tuesday, when delivering the department's budget vote.

The debt burden created by defaulting municipalities will be raised before Parliament on Wednesday. The Standing Committee on Public Accounts (Scopa) is meeting with Eskom, the Department of Cooperative Governance and Traditional Affairs (CoGTA), the South African Local Government Association (SALGA) and National Treasury to discuss municipalities defaulting on their debts.

According to Mkhize, the top five provinces owing Eskom are Free State, Mpumalanga, North West, Gauteng and Limpopo.

“Together they owe 70% of the total debt to Eskom. We have appealed to Eskom to suspend the interruption of services to municipalities due to the huge sums of monies that they owe,” Mkhize told Parliament.

Based on an assessment of performance, Mkhize said about 31% of the municipalities were reasonably functional, 31% were almost dysfunctional and the remaining 31% were dysfunctional or distressed.

“We are also mindful of the fact that the problems in many municipalities may be structural.

“The advent of wall-to-wall municipalities extended service delivery to previously neglected communities at the cost of the fiscus,” he said.

Eskom previously told Parliament’s portfolio committee on public enterprises in April that it was owed R13.5bn by municipalities. Ayanda Noah, group executive of customer services, said the matter was “beyond Eskom”. To get a sustainable solution, full support is required from Parliament, government and all South Africans.

She explained that defaulting municipalities fell into the habit of making new payment arrangements, which were more affordable. Municipalities did not "honour their arrangements”, she said.

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