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<\/a>These municipalities are often already burdened with debt, have poor financial management, and lack the resources to meet basic service delivery demands. <\/p>\n\n\n\n
Paying refunds further depletes their limited funds, potentially worsening their financial health. <\/p>\n\n\n\n
This could lead to reduced public services, delayed infrastructure maintenance, and increased pressure to secure additional funding through loans or other means, further exacerbating their economic challenges.<\/p>\n\n\n\n
The court ruling highlights the balance needed between regulatory compliance and municipal financial stability.<\/p>\n\n\n\n
Municipal debt owed to Eskom continued to grow in the first half of the utility\u2019s 2024 financial year, reaching R70 billion from R58.5 billion at the end of March. <\/p>\n\n\n\n
Eskom said that municipal debt has continued to escalate from already unsustainably high levels. <\/p>\n\n\n\n
In 2018, invoiced municipal debt totalled a mere R13.6 billion. By the end of 2023, it had grown to R70 billion, a 32% increase from the year before. <\/p>\n\n\n\n
The payment levels of municipalities continued to deteriorate, declining by 2% in the 2023 financial year to 76%. <\/p>\n\n\n\n
The top 20 defaulting municipalities pay less than half of their invoiced amount, with a 46% payment level. <\/p>\n\n\n\n
In June 2024, AfriForum secured a significant legal victory in the Pretoria High Court, successfully halting the implementation of electricity tariff hikes by 112 municipalities in South Africa. <\/p>\n\n\n\n
The court ruling came after these municipalities attempted to increase tariffs without submitting the required cost-of-supply (COS) studies to the National Energy Regulator of South Africa (NERSA).<\/p>\n\n\n\n
The COS studies are essential as they provide a detailed breakdown of the actual costs involved in supplying electricity, ensuring that tariffs are fair and justifiable. <\/p>\n\n\n\n
In the absence of these studies, the municipalities\u2019 proposed tariff hikes were deemed unjustifiable and unlawful. <\/p>\n\n\n\n
AfriForum challenged these increases, arguing that municipalities were burdening residents with higher electricity costs without the necessary regulatory oversight.<\/p>\n\n\n\n
“We realise that this judgment will have a significant impact on municipalities\u2019 budgets, but the line has now been drawn in the interest of consumers who have been milked as cash cows for years by inept municipalities,” said AfriForum.<\/p>\n\n\n\n
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