SA municipalities owe Eskom R94bn - Mkhize

Last week, the Standing Committee on Public Accounts noted that municipalities collectively owe Eskom R94 billion. 

Briefing Parliament on Monday, Mkhize said one of the worst offenders in the troubled Maluti-a-Phofung Municipality in the Free State, which owes Eskom R9 billion. 

"There has been a sizeable year-on-year percentage increase in average outstanding debt owed to Eskom, the Department of Water and Sanitation, Water Boards, and other suppliers of goods and services. This shows that the majority of municipalities are not honouring payment arrangements with the suppliers of bulk services and that virtually no progress has been made to reduce the debt owed to the suppliers of bulk services."

Mkhize says the massive Eskom debt is mostly due to poor revenue collection systems.

"We find that revenue collection systems are often weak, with indigent registers not being updated regularly and poor infrastructure maintenance leading to non-revenue water and electricity losses. Conditional grants also are often not optimised to help with repairs and maintenance of infrastructure."

He added that a number of government departments and households also owe municipalities hundreds of millions for services rendered.

In Mangaung, the committee heard that almost R40 billion is owed to municipalities, with households constituting 73% of that debt.

Mkhize says the culture of non-payment in communities is one of the biggest challenges.

"In turn, municipalities in the Free State owe Eskom and the water boards billions, with several municipalities defaulting on the debt relief programme. This arrangement was to help struggling municipalities with their Eskom debt, but many of them are defaulting. This is linked to municipalities’ inability to raise their own revenue."

Mkhize added that the committee was told that the Maluti-a-Phofung Local Municipality is bankrupt.

The municipality is operating with a deficit of R1.5 billion, which will take an estimated 20 years to recover.

"The Mangaung Metro, for example, along with the City of Tshwane, is one of the only two metros in a group of 74 municipalities whose audited financial position was found to be so dire that they had to disclose significant doubt about their ability to continue operating fully,” said Mkhize.

"The Mangaung Metro has been in this position for over five years and has been placed under national intervention in terms of Section 139(7) of the Constitution in April 2022. In the AG’s last audit report on municipalities, no municipality in the Free State received a clean audit.

"Nine municipalities have outstanding audits with six of the affected municipalities in the Free State, one in the Northern Cape, one in KwaZulu-Natal and one in the North West. This late submission or failure to submit annual financial statements is concerning, but so is the quality of these statements when they are submitted, and this compounds the already dire financial situation at these municipalities."

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