Eskom municipal debt rockets to R70 billion
Municipal debt owed to Eskom Holdings SOC Ltd., South Africa’s indebted state power utility, stands at R70 billion nationwide, with 20 defaulting municipalities constituting 76.7% (R53.96 billion) of the total invoiced municipal arrear debt.
This number is formulated from the period ending September 30, 2023, and is a sharp increase from the R58.5 billion of municipal debt recorded in March of this year.
“Non-payment of municipal debt remains a systemic challenge. Eskom is pursuing a multipronged strategy aimed at recovering municipal arrear debt owed; however, the problem continues to escalate,” said the power utility.
A Municipal Debt Relief programme facilitated by the National Treasury has been implemented to support municipalities in dealing with their longstanding debt challenges.
The National Treasury has stressed that municipal debt relief is highly conditional and that municipalities will have to meet certain requirements for the government’s loans to turn to equity. Specifically, the debt relief strategy requires compliance with 14 strict conditions outlined by the National Treasury. For a municipality to acquire relief, it must formally apply to the National Treasury.
By November 30, 2023, 52 municipalities (accounting for R50.2 billion of municipal debt) received approval or conditional approval from the National Treasury. An additional 20 municipalities (accounting for R6.5 billion of debt) have applied and are awaiting approval.
“No write-offs have been processed to date as the municipalities must comply with the conditions for 12 months for Eskom to process the first third of the debt write-off,” said Eskom.
Above this, the National Treasury allotted a R254 billion debt-relief package earlier this year to deal with some of its R400 billion debt.
For the 2024 financial year, the national government committed a total of R78 billion in debt relief for Eskom. According to the power utility, R16 billion was received in August, R20 billion in October and R5 billion in December 2023. The remainder is said to be received in the current financial year.
Despite the support, Eskom’s debt sits at R408.62 billion, 6% more than a year earlier, with the utility saying on Wednesday that it is on course for a R23.2 billion net loss this year.
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