We don't owe Eskom R3bn, municipal debt figures are inflated: De Lille

Public works and infrastructure minister Patricia de Lille has disputed the accuracy of the R3bn figure her department allegedly owes to Eskom.

Instead, De Lille claimed that municipalities inflate their debt in the monthly reports they submit to the National Treasury about the state of their budgets.

According to De Lille, there are huge discrepancies between what some municipalities claim is their debt to Eskom and what they actually owe.

“We have found enough proof to show that the reported R3bn owed to Eskom is unreliable and incorrect,” she said on Tuesday.

De Lille's department is responsible for the payment of all municipal accounts. In some cases it pays Eskom accounts on behalf of national government departments and municipalities.

Chief financial officer Mandla Sithole told MPs that the department pays municipalities and the municipalities in turn have a responsibility to pay the money over to Eskom. There are certain accounts where the department pays Eskom directly, where Eskom is a direct supplier to a client department.

A joint presentation by the departments of co-operative governance and traditional affairs (Cogta) and public enterprises, the Treasury, the SA Local Government Association (Salga) and Eskom in December showed that government departments and municipalities owed a combined estimated R36bn to the cash-strapped power utility.

Municipalities owed R26.5bn of that amount at the end of October, while provincial governments owed R5.8bn. National government departments owed R3.4bn, with the department of public works owing a whopping R3bn of that, Scopa heard at the time.

But on Tuesday, De Lille who was leading a delegation from her department to table a plan on how she was planning to tackle the Eskom debt, rejected these figures.

She said her department started a campaign to settle all outstanding national government debt owed to municipalities and to Eskom in August 2019. They did this because paying debt and paying it on time was among President Cyril Ramaphosa's priorities, she said.

De Lille said in the process of verifying and reconciling the debt of all 257 municipalities in the country, her department found that the reported R3bn was unreliable and incorrect — a serious offence where municipalities had reported inflated and wrong figures in the Section 71 reports.

Section 71(1) of the Municipal Finance Management Act (MFMA) requires that the municipal manager, as the accounting officer of a municipality, to submit a report in a prescribed format to the executive mayor within 10 working days after the end of each month on the state of the municipality’s budget.

De Lille said as of June 30 2019, municipalities reported that overall government debt owed by the department of public works and infrastructure was just over R3bn. At that stage, only 135 municipalities out of 257 municipalities had reported the debt they owed, while the remaining 122 reported that they did not owe anything.

Giving examples of the municipalities that inflated their figures, De Lille revealed that the Bushbuckridge municipality, for example, had disclosed in their Section 71 report debt of R925.5m, but after verification and reconciliation the outstanding amount was only R6.9m.

Similarly, the Emfuleni local municipality in Gauteng disclosed debt of R185.9m in their report. But they were unable to provide supporting documents to the value of this amount and after engaging with public works officials, “we found that the amount could be far less,” said De Lille.

The minister said they reported this discrepancy to the Gauteng Government Debt Forum.

De Lille also told MP about the Makhuduthamaga municipality in Limpopo, which reported R362.2m as the amount it owed Eskom, but after verification it was confirmed that the municipality only owes R1.3m.

“That is why I am saying the information contained in the Section 71 reports is unverified information. These are some of the examples we came across,” she said.

She said they have so far verified 63% of the reported R3bn and there was a difference of about R1.7bn from the amount the municipalities had stated in their Section 71 reports. When the accounts of these municipalities were verified, the actual amount owed was R186m, as opposed to the R1.9bn they claimed in the reports.

She also announced to MPs that while her department is committed to settling all the verified debt, as of April 2020 all government departments and all municipalities will pay the power utility directly.

Sithole revealed that Eskom had already complained about the new development, fearing the difficulties of dealing with separate departments and municipalities.