Billions of rand that South African municipalities owe Eskom Holdings SOC Ltd. are hindering the state-owned power utility\u2019s plan to restructure and separate its distribution unit, according to Chairman Mteto Nyati.<\/p>\n\n\n\n
South Africa\u2019s municipalities owed Eskom 95.4 billion rand ($5.1 billion) by November as they struggle to collect revenue from customers and available funds are sometimes misappropriated after years of mismanagement. <\/p>\n\n\n\n
Eskom completed the unbundling its transmission business last year, a major step in the process to restructure and split the utility into three units. That means the focus now turns to the separation of the distribution arm. <\/p>\n\n\n\n
\u201cThe municipal-debt challenge has the potential to jeopardise the distribution separation as well as threaten the financial viability and sustainability of the future distribution industry,\u201d Nyati said in Eskom\u2019s\u00a02024 annual report<\/a>.<\/p>\n\n\n\n The National Treasury in 2023 announced a debt-relief program to write off Eskom\u2019s debt, provided municipalities adhere to set conditions. The uptake on that has been slow and many councils fail to enforce the required credit controls.<\/p>\n\n\n\n \u201cThe board is concerned about the lack of compliance with the municipal debt-relief program, given that the conditions of the program prohibit Eskom from pursuing action against non-compliant municipalities,\u201d Nyati said.<\/p>\n\n\n\n Eskom has asked National Treasury to engage directly with non-compliant municipalities to address the issue the issue of non-payment or late payments, Chief Financial Officer Calib Cassim said in the report.<\/p>\n\n\n\n