Many of the decisions expressed in SA’s policies and legislation in the electricity sector have made it extremely difficult for municipalities to fulfil their mandate, SA Local Government Association (Salga) president Bheki Stofile says.
Speaking at the Municipal Just Energy Transition conference in Johannesburg on Monday, Stofile said the municipal fiscal framework was designed with the expectation that municipalities would fund 90% of their mandate through locally raised revenues, of which electricity distribution revenue would constitute more than a third.
“However, due to national government intervention, about 60% of electricity distribution is performed by Eskom, leading to significant revenue losses for municipalities,” he said.
The aim of the two-day conference is to find a way forward for the effective implementation of the Just Energy Transition Investment Plan (JET IP) at municipal level.
Much of the burden of the just energy transition will fall to municipalities which have been given wide-ranging responsibilities for climate change mitigation and adaptation under the Climate Change Act.
In addition, municipalities have a critical role to play in a successful energy transition but many lack the finances and capacity to respond to these responsibilities.
Municipalities also fear the Electricity Regulation Amendment (ERA) Act, recently signed into law by President Cyril Ramaphosa, will limit their role in providing electricity to households, businesses and government in their service areas.
This, municipalities have argued, would infringe on the powers granted to local government in the constitution.
“Salga has repeatedly implored both parliament and the president to reconsider this clause. We hope the effective date of the bill will exclude this clause, as failure to do so may undermine the very purpose of our discussions today on the municipal energy transition,” said Stofile.
Ramaphosa, who delivered the keynote address at the conference, said he understood Salga wanted “some exemptions to be inserted, and further talking to happen when implementation of the ERA Act begins”.
But, said Ramaphosa, the ERA Act paved the way for a competitive electricity market and for reforms that would help speed up decarbonisation in the energy sector.
Other challenges at local government levels that had to be addressed as part of the just energy transition included expanding support to indigent households through the free basic electricity programme and finding solutions to municipal debt.
Municipalities are owed about R350bn by customers for services such as electricity, and municipalities, in turn, collectively owe Eskom R78bn.
Stofile said municipalities’ attempts to engage Eskom in credit control measures had been refused, contributing to ballooning municipal debt.
“This creates a vicious cycle where municipalities struggle to collect revenue, yet Eskom demands payments without supporting municipalities in debt recovery,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.