SCOPA concerned over Eskom's growing municipal debt

The debt is expected to be nearly R100 billion by March next year.

Municipalities across the country currently owe the power utility a total of R82.3 billion.

The committee held an oversight meeting at Eskom’s Megawatt Park head office on Thursday morning.

SCOPA Chairperson Songezo Zibi warned that ordinary South Africans can no longer afford electricity tariff increases.

“We appreciate that turning around an institution such as Eskom takes time, and the progress made in reducing the projected annual losses, improvements to governance and control systems and eliminating load shedding for most of this current year.

"However, we remain concerned about Eskom’s financial viability, growing municipal debt expected to be nearly R100 billion by March next year, the length of time it takes to remove rogue suppliers and the slow pace of vetting staff in critical positions.”

Zibi added that the committees want a solution for recovering the R85 billion owed by municipalities to the power utility.

Eskom is expecting the municipal debt to increase to R128 billion by March 2026 if municipalities continue to receive electricity supply without repaying the outstanding debt.

"SCOPA plans to engage the Minister of Electricity on the ‘take or pay’ agreements with Independent Power Producers that place a financial burden on Eskom when its coal fleet performance can produce the required power.

"Members of Parliament also urged Eskom to urgently find a solution to the 14 million tonnes of coal stockpiled at Medupi Power Station, a legacy of the delays in the completion of the build project,” said Zibi

"In terms of the agreement, Exxaro supplies Eskom with an average of R14.6 million tonnes of power station grade coal to Medupi per annum for a term of 49 years. Eskom is unable to burn all the coal supplied to it by Exxaro due to the ongoing challenges at Medupi, which are leading to huge stockpiles of coal. 

"In 2023 Eskom paid R9.7 billion to Exxaro in penalties for not taking the coal from the mine that year. Eskom continues to incur further ‘take or pay’ penalties if Medupi does not burn the minimum contractual volumes,"

"Eskom will also make a detailed written submission to both committees to ensure they respond to all issues that could not be responded to today, ahead of the presentation of their 2023/24 annual financial statements in Parliament,” Zibi added.

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