Inside Eskom’s top 20 defaulting municipalities

In April 2015, Eskom announced plans to interrupt bulk electricity supply to the top 20 defaulting municipalities across the country.

According to struggling power utility, as at 31 March 2015, the total municipal arrears debt greater than 30 days was R4.6 billion.

The group said it will stop power supply to the 20 identified municipalities, with effect from 5 June 2015.

All under fire districts exhibit deep financial problems, with notable levels of wasteful expenditure and high levels of unemployment.

This is according to the Local Government handbook for 2015, carrying the latest available audited data – for the 2013 financial year.

In total, the municipalities identified by Eskom account for over R3.6 billion in wasteful expenditure, while carrying a R3.4 billion budget deficit.

The total municipal arrears debt greater than 30 days was R4.6 billion as at March 31, 2015 Eskom said recently.

Municipal problems

The Matjhabeng local municipality is the biggest culprit when it comes to unauthorised, irregular or wasteful spend, with R950.3 million.

Had this spending been appropriately dealt with, the municipality could have seen its budget deficit of R505 million turned into a surplus of R445 million.

The Madibeng local municipality, meanwhile, saw a relatively modest R9.4 million spent on wasteful things, which, if recovered, would have had little impact on its budget deficit – at R785 million for the year.

Balancing out budget deficits with wasteful expenditure (ie, presuming what the budget would look like if money wasn’t wasted), more than half Eskom’s trouble municipalities would be able to avoid default.

At least eight would still be in trouble, however.

Six of the 20 defaulting municipalities are in the Free State (FS), with North West Province (NW) and Mpumalanga (MP) accounting for four municipalities each.

Gauteng (GP) and the Eastern Cape (EC) account for two a pop, and the Northern Cape (NC) and Limpopo (LP) one each. No Western Cape (WC) municipalities are included.

Eskom’s 20 defaulting municipalities

Municipality Province Population Wasteful expenditure Budget deficit Balance
Matjhabeng Municipality FS 406 461 950.3 -505.8 444.5
City of Matlosana Local Municipality NW 398 676 890.8 -457.6 433.2
Thabazimbi Local Municipality LP 85 234 286.5 -61.4 225.2
Makana Local Municipality EC 80 390 188.6 -51.7 136.9
Ngwathe Local Municipality FS 120 520 225.5 -119.5 106.0
Dihlabeng Municipality FS 128 704 180.9 -82.8 98.1
Thaba Chweu Local Municipality MP 98 387 180.6 -112.6 68.0
Ditsobotla Municipality NW 168 902 9.2 38.4 47.6
Emalahleni Local Municipality EC 119 460 53.8 -18.4 35.4
Lekwa Local Municipality MP 11 562 229.2 -219.2 10.0
Randfontein Local Municipality GP 149 286 75.7 -74.6 1.1
Nala Local Municipality FS 81 200 N/A N/A N/A
Msukaligwa Local Municipality MP 149 377 132.3 -137.2 -4.9
Naledi Local Municipality NW 66 781 96.9 -111.7 -14.8
Nketoana Local Municipality FS 60 324 49.6 -72.5 -22.9
Nama Khoi Local Municipality NC 47 041 N/A -31.6 -31.6
Westonaria Local Municipality GP 111 767 17.2 -79.8 -62.6
Govan Mbeki Municipality MP 294 538 25.4 -107.8 -82.4
Maluti-a-Phofung Municipality FS 335 784 26.7 -414.1 -387.4
Madibeng Local Municipality NW 477 381 9.4 -784.9 -775.5
Total 20 3 391 775 3 628.6 -3 404.9 223.7

Note: Nala local municipality did not provide any data, and thus was not audited.  Nama Khoi municipality had no wasteful expenditure data recorded. Lichtenburg municipality is represented as Ditsobotla municipality, which was established through the amalgamation of the former Lichtenburg and other regional Councils.

Payment agreements

At the end of April, Eskom said it reached payment agreements with 10 out of the 20 defaulting municipalities (italicised in the table above).

However, acting CEO Brian Molefe emphasised that the utility “has reached a point where it can no longer continue to provide power without receiving payment in return.”

On Friday (8 May) Eskom cut off electricity supply to over a million Soweto residents. The cut followed protests by Orlando West residents over the utility’s decision to install prepaid electricity meters.

Soweto falls under the City of Joburg municipality, specifically Region D. According to Stats SA data from the 2011 census, the region has around 1.3 million residents.

Energy expert, Chris Yelland, said that Eskom’s theft and non-payment financial problems in Soweto are bigger than its non-payment problem with all 20 defaulting municipalities combined.

The township owes the electricity supplier as much as R8 billion, he said.

“The decision to leave Soweto residents without electricity for this prolonged period of time is insensitive, inhumane and smacks of unbridled arrogance,” said MMC for Environment and Infrastructure Services, Matshidiso Mfikoe.

“The City of Johannesburg will constructively engage Eskom to find a speedy, lasting and amicable resolution to this impasse.”

More on Eskom

Eskom owed R2 billion by Free State municipalities

Soweto owes Eskom more than top 20 defaulting municipalities

What about the schools and hospitals, Eskom?

Eskom price hike will drive up theft and non-payment

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Inside Eskom’s top 20 defaulting municipalities