Eskom: Here are the top municipalities defaulting on electricity bills

Eskom, South Africa’s embattled power utility, is attempting to recoup money owed to it by defaulting municipalities.

As Eskom teeters on the brink of complete financial and operational collapse, defaulting municipalities are being placed under the spotlight for debts nearing R15 billion owed to the power utility.

Eskom blames municipalities for its financial struggles

Eskom is facing a meltdown for a number of reasons – gross mismanagement, soaring debt to government, dubious Gupta deals which have led to dwindling coal supplies and an inability to bring defaulting municipalities to book – these are some of the major stumbling blocks which have led to the company’s dismal downfall.

While most South Africans are well aware of Eskom’s operational instability – shrugging it off as just another failed state owned enterprise – the disastrous effects of a collapsing power grid cannot be understated. Eskom is by far the biggest and most vital state entity.

Eskom raises electricity tariffs

The National Energy Regulator of South Africa (Nersa) has cited Eskom’s incompetence as a cause for great concern. Still, the regulator recently afforded Eskom an electricity tariff increase which could see South Africans paying between 4% and 19% more just to keep the lights on in 2019.

Eskom CEO Phakamani Hadebe defended the exorbitant tariff increases by placing the blame for the company’s financial calamity squarely on the shoulders of defaulting municipalities.

However, thanks to continuous government bailouts, Eskom, which supplies 90% of South Africa with electricity, currently owes around R387 billion in debt. This amount is set to rise up to R600 billion within the next four years. Hadebe commented on the dire situation by say:

“The situation dire and we can’t hide that. And in fact it has reached an unsustainable level.”

How much money municipalities owe Eskom

Let’s have a look at the municipalities which owe Eskom the most money.

Maluti-A-Phofung – Free State

According to a report published by Mail & Guardian in May, Maluti-A-Phofung Local Municipality in the Free State owes Eskom R2.8 billion.

The municipality, which includes Harrismith and Phuthaditjhaba as its major towns, is considered one of the poorest municipalities in the Free State. Eskom has noted that a court process is currently underway to determine payment methods – hinting at a possible direct payment agreement with consumers.

Matjhabeng – Free State

Matjhabeng Local Municipality, also in the Free State, has approximately 49 000 Eskom customers and owes the utility R1.8 billion in electricity bills.

eMalahleni in Mpumalanga – Mpumalanga

Emalahleni Local Municipality, located in the Nkangala District Municipality of Mpumalanga province, has over 117 000 Eskom customers and currently owes the utility around R1.6 billion.

While a payment agreement has been reached, Eskom claims that the municipality has defaulted on the terms and conditions.

Ngwathe – Free State

Ngwathe Local Municipality in the northern Free State owes Eskom just over R900 million. According to the power utility, the municipality is adhering to the repayment agreement.

Thaba Chweu – Mpumalanga

Thaba Chweu Local Municipality, which includes Pilgrim’s Rest, owes Eskom R431 million and has over 61 300 Eskom customers.

A court interdict is being sought to prevent Eskom from cutting the municipality’s power, despite the repayment agreements being flouted.

Naledi – North West

Naledi Local Municipality in the North West, which includes Vryburg, has over 17 500 Eskom customers and owes Eskom R280 million. According to Eskom, payment arrangements have been neglected by the municipality, which has resulted in court action.

Special mentions

Masilonyana, Tokologo and Nala local municipalities

These three municipalities in the Free State are being targeted by Eskom due to their non-payment. Tokologo local municipality owes Eskom R30 million; it has been warned of imminent power disruptions should it fail to proceed with monthly payments. The same warning has been issued for Nala local municipality.

Masilonyana local municipality, which includes Winburg‚ Brandfort and Theunissen, has already been hit with rolling blackouts as a result of its non-payment. Earlier this week, Masilonyana, which owes R39.8 million in unpaid electricity bills suffered daily power disruptions from 6 am to 9 am and from 5 pm to 8:30 pm.

However, things for Masilonyana residents are expected to get much worse. Should the municipality fail to reach an agreement with the power utility before the 24 October, towns in the region will be starved of electricity for 14 hours a day.

Soweto owes Eskom a whopping R15 billion

Soweto owes Eskom R15 billion in unpaid electricity bills – this amount is equal to what almost 60 municipalities combined also owe the utility.

Khulu Phasiwe, spokesperson for Eskom, explained that Eskom’s non-payment was, almost singlehandedly, crippling the utility, saying:

“The solution for Soweto needs urgent government intervention. The problem is getting worse. We disconnect people who don’t pay, but some work with our technicians to reconnect themselves.”

Phasiwe stated that while Eskom provides about 180 000 households with electricity, the township’s principal debt stands at R7 billion but has accumulated interest of a further R8 billion.

The argument coming from Soweto locals is that they cannot afford to pay for electricity, hence the resistance to the installation of prepaid meters.

Only 4000 Sowetan households have prepaid electricity meters installed.