Treasury cuts off 60 municipalities owing Eskom billions

The National Treasury has begun withholding purse from as many as 60 Municipalities who owe power utility Eskom and additional creditors R9 billion.

Treasury is responsible for managing South Africa’s national government finances, said that the persistent failure by some municipalities to pay creditors within 30 days amounts to financial mismanagement.

It said that with effect from 20 March 2015, it withheld the transfer of equitable share of the national budget to 60 municipalities due to failure to honour their financial commitments in general, “and to pay Eskom and other service delivery creditors in line with section 65 (2) of the Municipal Finance Management Act, 2003 (MFMA, Act No. 56 of 2003)”.

Section 216 (2) of the Constitution permits the National Treasury to stop the transfer of funds to any organ of state that commits persistent and material breach of their financial obligations.

“Municipalities, as at 31 December 2014, owed Eskom R9 billion, of which R4.5 billion is current and the balance relates to arrears, which is a persistent breach of the payment terms applicable to creditors,” it said.

Municipalities also owed Water Boards R3.6 billion, of which R1.3 billion is current and R2.3 billion relates to arrears which is a persistent breach of the payment terms applicable to creditors, Treasury said.

In February, Minister Of Public Enterprises, Lynne Brown said that the government was hatching a plan to claw back the R4.75 billion owed to it by municipalities.

According to a report in the City Press, the ailing power provider would enlist the services of debt collectors.

More on Eskom

Eskom a “positive crisis”: ANC

Eskom blackouts cost South Africa R80 billion per month

Eskom wants R4.75 billion from municipalities

Eskom owed R10.8 billion by municipalities

 

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Treasury cuts off 60 municipalities owing Eskom billions