Tshwane and Ekurhuleni pushing Eskom to the brink
Eskom says that the cities of Tshwane and Ekurhuleni are threatening the group’s liquidity and financial stability by racking up electricity debts in the billions of rands.
The group noted that municipal electricity debt in Gauteng continues to increase rapidly, with the City of Tshwane and Ekurhuleni Municipality jointly owing Eskom R4.7 billion as of 31 August 2023.
Tshwane owes Eskom about R3.2 billion, which has accumulated over July and August 2023, due to erratic payments. Ekurhuleni’s debt is currently just under R1.5 billion.
Eskom said that the payment patterns by both municipalities have deteriorated to concerning levels that “threaten Eskom’s liquidity, financial performance, and sustainability”.
“The erratic payments by the CoT dating back to 2022 are alarming; also of serious concern is the entrenched practice by the CoE of settling its account late over the past six months.
“Despite all the avenues that Eskom has explored to recover what is due to the organisation, both municipalities have failed to fully honour their payments and to comply with their electricity supply agreements,” Eskom said.
Eskom is owned billions upon billions by South African municipalities, with the latest reporting pointing to a massive R63.7 billion as at 30 June 2023.
Reporting its quarterly results to the Standing Committee on Appropriations at the end of August, Eskom suffered a R5 billion loss before tax in the first quarter of the 2023/24 financial year ending June 2023.
The group’s net revenue grew to R70.9 billion (versus R66.3 billion over the same quarter in 2022), which was largely driven by the significant 18.65% increase to tariffs for direct customers from 1 April 2023.
Sales volumes were 6.2% lower than budgeted and declined by 7% compared to the previous comparable period.
While Eskom’s battle with the City of Tshwane over money owed is well documented, having Ekurhuleni join the party is a significant blow to the power utility.
The group has previously threatened to take the matter to court to get Tshwane to pay up. However, Tshwane finds itself in dire financial straits, with the city’s treasury conceding that it simply has no money.
Eskom has previously stated that it is willing to work with municipalities to ensure that payments are made – and some form of conditional debt relief is in the pipeline – however, its interactions with Tshwane have hit several dead-ends.
On top of having to contend with its unpaid electricity bill in the midst of a financial crisis, Tshwane is also suffering multiple service delivery failures due to ongoing illegal strikes over the city blocking public service wage hikes.
Power infrastructure has been failing repeatedly in various regions of the municipality, with limited team capacity available to address it.
Loading ...