Eskom laments the bad debt incurred by numerous Free State municipalities.
Of the 19 municipalities in the province, 15 are in the red, Eskom announced on Monday (28/03).
This bad debt obstructs its ability to fulfil its obligation of supplying power without disruption, and it also has a negative impact on cash flow.
The defaulting municipalities are facing blackouts.
Eskom stated that by the end of February it was owed a combined R16 billion by the 15 debt-ridden municipalities, as well as the Mangaung Metro. This is for bulk supply.
Defaulting municipalities are Maluti-a-Phofung, Matjhabeng, Ngwathe, Nketoana, Phumelela, Mafube, Nala, Mantsopa, Masilonyana, Tokologo, Dihlabeng, Moqhaka, Tswelopele, Setsoto and Letsemeng.
According to Eskom, three municipalities – Maluti-a-Phofung, Matjhabeng and Ngwathe – consume R200 million (97 GWh) of energy on average monthly.
“To date these municipalities have increased their debt to Eskom to R12,5 billion. Collectively this accounts for 78% of the overdue debt in the province,” said Agnes Mlambo, Eskom’s general manager for the Central East Cluster (Free State and KwaZulu-Natal).
Eskom has been embroiled in a long and bitter legal dispute with the cash-strapped Maluti-a-Phofung since 2019.
“This behaviour threatens the security of supply to the citizens residing in these supply areas, as Eskom cannot continue to maintain its infrastructure and supply electricity for free.
“Municipality debt puts immense burden on Eskom’s revenue stream, which negatively affects service delivery.”
The entity laments that outstanding debts by municipalities have become an overwhelming challenge, affecting loyal paying customers and communities who bear the brunt of defaulting municipalities.
The revelation regarding the crippling debt comes days ahead of Eskom’s new tariff hike of 9,61%.
This tariff for the 2022-’23 fiscal term was approved by the National Energy Regulator of South Africa (Nersa) last month.
The tariff goes up on 1 April for Eskom customers. The increase that municipal customers can expect to pay will be effective from 1 July this year.
Last year Nersa approved a hike of 15,06% for Eskom’s direct customers, while municipalities tariff increased by 17,80% for consumers.
