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Deputy President David Mabuza / Image via GCIS

Mabuza “concerned” with municipalities R19,9 billion Eskom debt

David Mabuza stated the most concerning debt is R19,9 billion municipality debt owed to Eskom

David Mabuza traditional leaders coronavirus lockdown

Deputy President David Mabuza / Image via GCIS

In a question and answer session at the National Council of Provinces on Wednesday, Deputy President, David Mabuza, mentioned the most concerning debt is R19,9 billion municipality debt owed to Eskom

Municipalities are struggling to pay Eskom 

According to Eskom’s 2019 Integrated Report, the total debt owed to Eskom by municipalities is R19,9 billion; this indicates 71,7% of invoiced municipal debt which includes interest.

The Department of Co-operative Governance and Traditional Affairs indicated that more than R9,7 billion is owed by national and provincial government departments to municipalities. 

The National Treasury has indicated that aggregate Municipal Consumer Debts amounted to R165.5 billion as of 30 June 2019.

Deputy president requests the nation to confront the culture of “non-payment”

Mabuza noted that municipalities struggle to provide basic services, and due to increasing consumer debt many municipalities have a hard time meeting their payment obligations. 

“The top 20 defaulting municipalities constitute 81% of total invoiced municipal arrear debt with total arrear debt of more than R100 million each. However, indications are, these figures have increased significantly over the past few months. “

Mabuza urges South Africans to play a role in alleviating the burden of debt faced by municipalities. The deputy president stated that the nation needs to confront the culture of “non-payment”; especially when it comes to consumer debt. 

“We must engender a culture of paying for services that have been rendered and consumed, especially from public entities like Eskom, just as we do with any other form of services rendered for private consumption.”

Deputy President, David Mabuza

What was the question asked during the National Council of Provinces?

The question asked was:

“What mechanisms are employed by the government in reducing intergovernmental debt?”

National Council of Provinces, question and answer

This includes the debt owed by different government departments, debt owed by State-Owned Enterprises (SOE’s) as well as the debt owed by and to municipalities.

In response, the deputy president noted that National Treasury and the Department of Public Enterprises; is working on a strategy to alleviate the pressure of debt by SOE’s, and this strategy would reduce the SOE’s dependency on government bail-outs.

“Mechanisms for ensuring that government departments and State-Owned Entities’ settle their debts in time are provided for by section 38 of the Public Finance Management Act. 

Deputy President, David Mabuza

Mabuza further noted that accounting officers and executives need to take disciplinary actions against any department that fails to comply with the Public Finance Management Act.

Eskom’s debt reaches new heights

On Tuesday, Jabu Mabuza, Eskom’s boss, noted that the power utility’s debt has reached a total of R450 billion, and the company has to borrow money to service its debt.

The Joint Appropriations and Public Enterprises Committees are set to discuss Special Appropriations Bill of the power utility, aiming to give Eskom R59 billion in the next two years. Jabu further elaborates that the tariff increases are not cost-reflective as operation costs are at a staggering R151 billion, which further indicates a 30% increase. Jabu declared that the company’s debt surpasses revenue by R36 billion, as revenue is at a total of R33 billion and the debt continues to reach heights at a total of R59 billion

jabu mabuza state capture inquiry eskom
JOHANNESBURG, SOUTH AFRICA – NOVEMBER 28: Eskom chairman Jabu Mabuza during the power utility’s annual financial results presentation on November 28, 2018 in Johannesburg, South Africa. During the presentation, it was revealed that Eskom’s debt service costs have doubled in a one year to R45bn. (Photo by Gallo Images / Business Day / Freddy Mavunda)

Enoch Mgijima Municipality continues to drag its feet with paying Eskom back

In a report, Enoch Mgijima Municipality still owes Eskom R198 million, despite the payment agreement established in November 2018. 

The municipality is at risk of having the supply completely cut off by Eskom, despite residents regularly paying directly to the municipality for electricity consumed.