State power utility Eskom is always associated with enormous amounts of money — and seldom in a positive way.
It declared a R55bn after-tax loss for the 2023/24 financial year, as it faced declining sales and increased input costs.
Then, there is the whopping R254bn government debt-relief package aimed at stabilising Eskom.
In the background, undermining everything, is the ever-present factor of municipal arrear debt to Eskom which now stands at more than R100bn, 33% higher than last year.
The enormous amounts the government pays to municipalities via their local government equitable share funds to provide, among other things, free basic electricity to the poor are too often illicitly redirected to administrative salaries and other things for which it was not intended.
Any good the R254bn might do is simply undone by the persistent mismanagement of local government, which builds up enormous arrears.
Debt repayment agreements signed between municipalities and Eskom are flouted without consequence.
Eskom’s carefully crafted, generous debt-relief packages, giving participating municipalities the opportunity to have their arrear debt written off over three years provided they meet the simple condition of doing their job, come to nought.
The conditions, including that, over those three years, the defaulting municipalities pay their current debt to Eskom and maintain an 85% collection rate, are simply beyond their capability.
Eskom’s distribution head, Monde Bala, says municipalities, including metros, simply treat the whole deal as a “payment holiday” and almost immediately default on conditions.
Eskom is limited in terms of retaliation as it is inhumane and destructive to cut off electricity to entire cities because municipal administrations are too useless to pay for this essential service.
Municipalities seem incapable of maintaining municipal infrastructure to reliably distribute electricity or to properly collect payment for it. And then they don’t pay for the bulk electricity provided
The power utility’s chief executive, Dan Marokane, has now asked the National Treasury to force municipalities in arrears to allow the utility to take over electricity services.
It would forge agreements allowing Eskom to handle metering, billing and revenue collection, while municipalities retain their own tariffs.
In other words, the municipalities would not lose out on their “middleman” cut but wouldn’t have to do the work to earn it.
There are two indisputable facts at play here.
The first is that the system does not work. Municipalities seem incapable of maintaining municipal infrastructure to reliably distribute electricity or to properly collect payment for it.
And then they don’t pay for the bulk electricity provided.
The second is that every attempt to secure payment to Eskom fails.
It makes sense for Eskom to step in and take over.
It will have some legal hoops to jump through, and it may have to win over the unions, but the bottom line is that it will benefit the public.
And surely that is what counts.
Daily Dispatch
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