Soweto’s debt to Eskom grows

Eskom's proposed tariff hike can be detrimental to the middle class citizens which can lead to job losses, cable theft adn debt increases. Picture: Dean Hutton/Bloomberg

Eskom's proposed tariff hike can be detrimental to the middle class citizens which can lead to job losses, cable theft adn debt increases. Picture: Dean Hutton/Bloomberg

Published Nov 25, 2015

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Johannesburg - The lights are still on in municipalities and Soweto, but the massive debts to Eskom remain unpaid.

The municipal debt has dropped slightly but Soweto’s debt continues to grow, and Eskom continues to struggle to collect on both.

The debts are a touchy subject because of the difficulties of collection and the political implications of cutting off those who don’t pay.

It’s a problem that’s only going to get worse, with local government elections due next year and service delivery, electricity debts and the unpopular smart meters which are being installed all likely to remain hot issues.

Yesterday, Eskom chief executive Brian Molefe, presenting Eskom’s interim financial results for the six months ending September, said the Soweto arrears debt, outstanding for more than 30 days, was R9.467 billion at the end of September.

He didn’t provide comparative figures, but Eskom’s annual report, released earlier this year, listed the total Soweto debt, including interest, at the end of March as R8.611bn - up from R7.020bn the year before - and the average payment level in Soweto as just 16 percent of the amount billed.

That means the Soweto debt is continuing to grow.

Yesterday, Molefe said the municipal arrears, outstanding for more than 30 days, by September was R4.901bn.

This is virtually the same as the municipal arrears as at March of R4.953bn, listed in the Eskom annual report.

A graph which Molefe used yesterday showed the municipal arrears as steadily increasing every year, including over the past year.

This indicates some limited success from Eskom’s threats to switch off defaulters and the National Treasury’s threat to withhold equitable share payments to defaulting municipalities.

Molefe said payment agreements were signed with 50 defaulting municipalities, including 15 of the top 20.

Eskom's chief financial officer, Anoj Singh, said: “There has been a reasonable amount of success in terms of the agreements we have signed with the municipalities. It has stopped the spiralling of the debt, and the municipalities are in the process of adhering to the spirit of those agreements.”

Executives ducked the question of how much of the arrears the utility expected to recover from the defaulting municipalities by the end of the current financial year.

Eskom executive Ayanda Noah said that collecting the Soweto debt lay with the implementation of prepaid meters, which she said had met with resistance.

“It is difficult to estimate how much we are going to be able to collect by the end of the financial year because it depends on the success of the installation programme,” said Noah.

Eskom hopes to install 34 000 smart meters in Soweto by the end of the financial year, just part of the total 150 000 customers in Soweto.

Once the meters are installed, Eskom hopes to deal with the overdue debt.

THE STAR

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