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Local government has upper hand in Eskom debt saga

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Xolisa Phillip has had quite an adventure as a journalist in the roles of subeditor, news editor, columnist and commentator. She pretends to be Olivia Pope during the day, while still maintaining a presence in journalism – a passion project she cannot shake away. Journalism keeps finding Phillip no matter where she is and somewhat manages to hold its own space no matter where she is professionally.

In the past 12 months, councils’ dues to the power utility have risen to R28bn, and there is no immediate resolution in sight. The inter-ministerial task team set up to deal with the issue has all but conceded defeat. There is a complex set of reasons why municipalities are not paying their dues to the power producer.

It seems as though Eskom has resigned itself to the possibility of not recouping the billions it is owed by municipalities around the country.

At least that is what can be read between the lines of inputs made recently by the power utility’s CEO, Andre de Ruyter, to Parliament.

The state-owned power producer has put all manner of sweeteners and carrots before the debtors, but municipalities are not biting. Instead, the problem is getting worse. The power utility has slashed interest and stretched payment days without much to show for its concessions.

Since 2009, Eskom, which itself is steeped in its own debt woes, has grappled with how to get errant councils in line, to no avail.

In the past 10-year period, municipal debt has risen from R9-billion to the current R28-billion – with no immediate end or resolution in sight. There have been countless measures devised to address the issue, but it persists and is escalating.

There is a complex nexus of interrelated factors that have resulted in the apparent stalemate.

For starters, there is nothing the minister of co-operative governance and traditional affairs, whose ministry oversees local government, can do about the problem while acting alone.

Dr Nkosazana Dlamini Zuma admitted as much in March, when she appeared before lawmakers. Dlamini Zuma even bemoaned the fact that she was summoned to Parliament, grilled and put on the spotlight – and not the municipalities at fault.

Simply put, the Department of Co-operative Governance and Traditional Affairs has no leverage to enforce municipal compliance. The South African Local Government Association (Salga), however, is better placed to encourage its members to cough up, according to the minister.

The inter-ministerial task team set up to develop a plan and a coordinated approach to deal with the problem has also come up empty.

But everyone agrees that the municipal debt owed to Eskom is a national disaster and a brewing crisis that cannot be ignored or wished away.

Back in early 2015, the National Treasury withheld the equitable share of municipalities with outstanding debt to Eskom and the Municipal Water Board. Sixty councils were affected, while millions of residents stood to be disadvantaged and deprived of services.

This caused an outcry, at the forefront of which was Salga. The organisation fought tooth and nail for its members to receive their constitutionally guaranteed and mandated equitable share.

In their defence, defaulting municipalities point out that they, too, are owed billions for services rendered. In 2015, municipalities were owed an estimated R96-billion. Surprisingly, about R5.4-billion of that debt was owed by government departments, Salga revealed.

Parliament, too, was left unimpressed by the National Treasury’s actions, with MPs questioning whether the fiscus was a debt-collection agency acting on behalf of Eskom and the Water Board.

The pressure worked. Well, partly.

The National Treasury loosened its purse strings after most of the affected municipalities inked debt repayment agreements.

In their defence, defaulting municipalities point out that they, too, are owed billions for services rendered. In 2015, municipalities were owed an estimated R96-billion. Surprisingly, about R5.4-billion of that debt was owed by government departments, Salga revealed.

At that time, the worst offenders were the departments of health, public works and education.

At present, the municipal debt repayment agreements signed in 2015 appear to have come undone.

Last week, De Ruyter told MPs the Department of Co-operative Governance and Traditional Affairs’ intervention in the matter has not “yielded the results everyone anticipated”.

National government’s ability to intervene is constrained, while municipalities and other parties have acted swiftly through the courts to prohibit Eskom from completely cutting off bulk power supply.

As for the inter-ministerial task team’s efforts in the matter, its actions have not been “as effective as one would have wished for”.

Municipal non-payment has also risen as the country grapples with the consequences of the Covid-19 outbreak. In the same breath, one can imagine that debt owed to councils has spiked.

There is no foreseeable end to the deadlock, and Eskom has limited avenues to pursue its dues. BM/DM

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