Councils in debt lose power sales: Eskom takes over sales to reclaim R143m owed

Three newly merged provincial municipalities struggling to pay their combined Eskom electricity debt of R143-million, will no longer be allowed to sell electricity directly to their communities.

The task will now be taken over by Eskom for the next three years until the debt is paid off.

This means the struggling councils which were merged because they were not viable, will sink deeper into financial crisis as they will lose the revenue they got from electricity sales.

The affected councils are;

lRaymond Mhlaba municipality which covers Alice, Fort Beaufort and Bedford;

lWalter Sisulu municipality, which covers Aliwal North, Burgersdorp and Steynsburg; and

lDr Beyers Naude municipality in Graaff-Reinet and Aberdeen.

This was revealed by department of cooperative governance and traditional affairs MEC Fikile Xasa this week.

The three municipalities were formed after the August 3 local government elections following the provincial government’s decision to merge councils that were not viable, a move which saw the number of Eastern Cape municipalities cut from 45 to 39.

In November, Eskom issued a notice threatening to stop electricity supply to the three councils for their failure to pay their bills.

Eskom supplies bulk electricity to municipalities, who in turn sell it to residents at an increased tariff as a source of revenue.

At the time it was revealed that Walter Sisulu owed Eskom more than R105-million, dating back to July 2010; Raymond Mhlaba owed R21-million from April 2016; while Dr Beyers Naude was indebted to the tune of R16.8-million.

Some municipalities forming part of the merged councils were in the same predicament in December 2015, when Eskom cut supply after they defaulted in paying a combined debt amounting to R173-million.

Their power was reconnected after a desperate scramble by provincial government, which at the time committed to paying R15-million towards settling the Eskom debt.

There are other municipalities in the province who have also struggled to keep up with their Eskom debt repayments, including the cash-strapped Grahamstown-based Makana municipality.

In May last year, National Treasury resorted to withholding equitable share payments to municipalities with outstanding debts to Eskom, including some who are in the same predicament now.

Xasa this week said no more bailouts would be afforded to any defaulting councils.

He said it had now been agreed that Eskom would take over operations, while using profits made to also service the outstanding debts owed by these municipalities.

According to Xasa, the breakthrough was reached after the premier Phumulo Masualle had engaged with senior politicians nationally.

“It was finally agreed in those meetings that Eskom should take over operations, install their own systems and sell electricity directly to the people without the municipality’s involvement.

“This is because these councils do collect revenue from electricity sales, but fail to pass it over to Eskom, but instead use it for other things,” said Xasa.

Eskom spokeswoman Ntosh Mafumba yesterday confirmed that Eskom “is in discussions with Dr Beyers Naude and Raymond Mhlaba local municipalities to assist them with revenue management over a period of three years”.

Xasa also revealed that a total of R15-million had been allocated by his department in the 2017-18 financial year to complete electrification projects in King Sabata Dalindyebo’s Phola Park and Ntabankulu municipality. — asandan@dispatch.co.za