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Municipalities owe Eskom R30bn, parliaments hears

Municipal debt to Eskom is approaching R30bn, up more than R8bn in the last 12 months, acting DG Kgothatso Tlhakudi told parliament on Wednesday night.
Municipal debt to Eskom is approaching R30bn, up more than R8bn in the last 12 months, acting DG Kgothatso Tlhakudi told parliament on Wednesday night.
Image: FILE

Municipal debt to Eskom is fast approaching the R30bn mark, after it shot up by more than R8bn in the last 12 months.

This is according to figures presented to parliament's standing committee on appropriations on Wednesday night by Kgothatso Tlhakudi, acting director-general of public enterprises, as well senior officials from the National Treasury.

Tlhakudi also told MPs that the state-owed power utility was meeting a majority of the conditions attached to the multibillion-rand financial support it was receiving from the national government for the 2020/2021 financial year.

Tlhakudi said the one outstanding condition Eskom was yet to meet was the disposal of the Eskom Finance Company (EFC), which provides financial services to the company's employees.

The government wants EFC disposed of from Eskom's business model as part of the unbundling of the utility, arguing that it is non-core to the mandate of the electricity generator.

Tlhakudi said due to the current state of the economy, which has been worsened by the Covid-19 pandemic, the financial markets and other industry players have shown little appetite towards EFC.

The acting DG of public enterprises said despite Eskom making several concessions on its municipal debt recovery strategy, there had been no "material change" in the payment behaviour of municipalities.

"The municipal debt remains a big challenge for the business. The arrear debt is sitting at about R28bn at the end of the last financial year [March 2020], having increased from R19bn.

"Despite certain concessions that Eskom has made to municipalities, the situation is  not improving. There are measures that Eskom has put together to try and reduce the burden on municipalities, including placing the debt in a suspense account," said Tlhakudi.

"The concessions cover the interest rate that have been reduced to lessen the burden on municipalities, there's extended payment terms that have been agreed and also payments are also been allocated to capital to try and reduce the burden. Unfortunately these measures are not having the desired effects."

Tlhakudi reported to parliament that Covid-19 had also negatively impacted Eskom's ability to generate revenue as the national lockdown resulted in lower energy demand. This has allowed Eskom to not implement load-shedding.

But ANC MP Dipuo Peters, who is also a former energy minister, said it was disappointing that Eskom was still not reporting significant progress in turning around its finances, despite the level of support it was getting from the government.

"Eskom has become the spoilt brat of the family," she said.

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