NATIONAL NEWS - Officials in the electricity and municipal government spheres have given a frank assessment of the dangers created by debt owed by and to municipalities.
Eskom is owed a combined R110 billion by municipalities, while consumers owe a combined R467 billion to municipalities nationally.
Ministers from the Departments of Finance, Electricity and Energy, and Cooperative Governance and Traditional Affairs (Cogta) were on Wednesday joined by officials from Eskom and the South African Local Government Association (Salga) to discuss how each was addressing their areas of responsibility.
‘Innovative and drastic ways’
Electricity and energy Minister Kgosientsho Ramakgopa said that a failure to arrest the debt would leave municipalities unable to carry out basic functions.
He said that while any recovery would take “patience”, the situation was “not an Eskom problem, but a bigger structural problem”.
As later confirmed by the other departments, Eskom stated that the Distribution Agency Agreements (DAA) had improved revenue collection, reduced losses from illegal connections, and improved overall municipal efficiency.
However, the interventions needed to be more impactful and widespread, as only a handful of municipalities had agreed to a DAA.
“Unless we come [up] with very innovative and drastic ways, we will never be able to get this debt ever resolved,” said Ramakgopa.
Other interventions included the municipal debt relief programme, which involves 71 municipalities.
This programme offers the opportunity to have historic debt written off if a municipality can demonstrate consistent payment on its current Eskom account.
So far, 24 municipalities have had one-third of their debt written off, while a further 27 have had portions of their debt written off.
Termination letters were sent to another 13 municipalities that had failed to honour payments – one of those being disputed, two undergoing Eskom’s credit control process and 10 now under administration.
Load reduction working
However, Eskom stated that load reduction had been a relative success, with 971 areas initially subjected to the measure seeing a 42% drop due to improved payment and compliance.
Smart meters were touted as the most effective physical intervention, with officials across departments confirming they resulted in a 26% revenue uptick across municipalities and a 96% payment recovery by Eskom.
Cogta laid the overall blame at the feet of those who consume without paying.
“We are actually trapped in this cycle where there’s no collection from consumers, and as a result, obviously, we cannot pay Eskom.
“This reflects there is a systemic breakdown in revenue collection as well as payment compliance. There is a culture of non-payment,” Cogta stated.
The department outlined that municipalities were suffering from “fragmented management systems” that could be gradually solved through DAAs
The department concluded that in distressed municipalities, the DAA can function as an effective recovery mechanism and is “neither inherently a threat, nor a solution, but rather a tool”.
Salga wants assurances
However, Salga believes the DAAs threatened the autonomy of municipalities as defined in the constitution.
Salga’s presentation argued that internal reforms were still viable and that municipalities could implement their own recoveries if given greater funding, training and support.
“Salga wishes to impress upon national government partners to provide resources on Section 78 support to municipalities, over and above what Salga is doing,” the entity’s presentation stated.
Salga also strongly opposed municipalities being forced to sign DAAs or enter into other recovery arrangements without legislative compliance.
“We impress upon Eskom not to pressurise municipalities to sign illegal DAAs discussed outside the intergovernmental relations (IGR) engagements. Respect the IGR process,” its presentation added.
‘The failure here is not Eskom, the failure here is municipalities’
The DA’s Kevin Mileham argued that Salga had to place greater pressure on municipalities to either pay or find workable alternatives.
He highlighted that consumer debt was four times higher than what Eskom claims is due to it, noting that revenue collection lies in municipal hands.
“Being very blunt, get off your backsides and collect the revenue. Pay Eskom. The failure here is not Eskom; the failure here is municipalities,” said Mileham.
MK party’s Adil Nchabeleng stated his belief that municipal management was not being held accountable, citing high salaries and bonus payments while municipalities fail.
He suggested that the department officials rein in the personal expenditures of municipal staff as a clear way to recoup funds.
“If this programme fails, who will be held responsible and whose head is going to fall? Which minister, which CEOs, municipal managers and mayors?” asked Nchabeleng.
‘Ghastly’ consequences
ACDP’s Wayne Thring said none of the presentations addressed what he believed were the greater causes of dysfunction.
“It is corrupt, unethical and immoral behaviour that we see within our municipalities.
“If Salga and Cogta do not assist the municipalities in addressing some of these challenges, then Salga and Cogta are complicit,” said Thring.
Ramakgopa had earlier said that governments took from the wealthier residents to subsidise the poorest, but Thring said that model had a unique flaw.
“South Africa doesn’t have that luxury. We have a declining tax and rate base. The model is not going to be able to sustain itself.
“Very clearly, the model that is sustainable is [that] we need economic growth. It is economic growth, accompanied by good, ethical governance, which drives employment.
“If you cannot provide solutions, other than the ones that are being provided, the consequences, I believe, are too ghastly to contemplate,” Thring concluded.
Article: Caxton publication, The Citizen
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