DailySun
Chairman Mteto Nyati has stated that the substantial amount of rand owed to Eskom Holdings by South African municipalities is hindering the state-owned power utility’s efforts to modernize and segregate its distribution sector.
As of November, South African municipalities had a debt of R95.4 billion ($5.1 billion) to Eskom, all while they face challenges in collecting revenue from customers. In certain cases, financial resources have been misallocated due to years of poor management.
Last year, Eskom successfully completed the unbundling of its transmission division, a key achievement in its strategy to restructure and break the utility into three distinct entities. The next priority is the separation of the distribution sector.
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In Eskom’s 2024 annual report, Nyati noted, “The challenge posed by municipal debt represents a significant risk to the separation of the distribution unit and could jeopardize the financial stability and sustainability of the future distribution landscape.”
This year, the National Treasury launched a debt-relief program aimed at helping Eskom, subject to municipalities fulfilling certain criteria. However, participation has been slow, and many councils find it difficult to enforce the necessary credit controls.
Nyati voiced his concern, stating, “The board is troubled by the inadequate compliance with the municipal debt-relief program, particularly since the conditions of the program restrict Eskom from taking action against municipalities that fail to comply.”
In the report, Chief Financial Officer Calib Cassim mentioned that Eskom has asked the National Treasury to directly engage with non-compliant municipalities to address issues related to non-payment or delayed payments.
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