Municipal debt could collapse Eskom, says Ramokgopa

The R78 billion that municipalities owe Eskom is irrecoverable, says Minister of Electricity and Energy Kgosientsho Ramokgopa.

The R78 billion that municipalities owe Eskom is irrecoverable, says Minister of Electricity and Energy Kgosientsho Ramokgopa.

Published Jul 9, 2024


The R78 billion that municipalities owe Eskom is irrecoverable, says Minister of Electricity and Energy Kgosientsho Ramokgopa.

Briefing the media on electricity distribution and generation performance on Monday, Ramokgopa warned that the debt owed by municipalities to power utility Eskom could spiral out of hand to R3 trillion in the next 26 years.

“I can tell you a lot of this is irrecoverable. There is no possibility under the sun that we are to collect that R78 billion. A lot of it is over three to six months,” he said.

Ramokgopa said Eskom needed this money for it to re-invest into its own infrastructure.

However, he said municipalities simply did not have the means to pay up.

“We must protect the interests of Eskom as a going concern and ensure municipalities are able to collect but also protect the interests of users.

“If we don't resolve this problem our projection is that at the current rate, by 2050 Eskom (debt) will be R3.1 trillion.

Eskom will collapse,” he said, warning that the generation capacity would be compromised.

“It is important that we resolve this question. That is why I am saying this is the most urgent task that is confronting us.”

Ramokgopa was re-appointed to the Cabinet with the addition of energy to his portfolio after he was tasked to end load shedding last year.

His briefing comes just after the country recorded 100 successive days without load shedding.

Ramokgopa said the issue of energy sovereignty still remained one of the pre-emptive questions that will confront the seventh administration.

“Although we register progress on the back of implementation of the Energy Action Plan, it is important that we remain focused on the resolution of the immediate challenge and that is the issue of load shedding.”

He said President Cyril Ramaphosa, instead of hiding the electricity within the energy sector, lifted it so that the ball was not dropped, and to continue with work they had done towards the end of the last administration.

There was a new crisis where many parts of the country experienced load reduction for some hours as a result of perennial under-investment in electricity infrastructure by municipalities due to their poor planning and issues of technical capacity.

“We have seen that there is little to no investment that has been made to replenish the maintenance, the upkeep, protection and modernisation of this infrastructure.”

As a result, municipalities are under severe strain. They initiate what is called load reduction – distribution infrastructure does not have capacity to meet reticulation demand and households don’t have electricity during parts of the day.

“That has nothing to do with the performance of Eskom but everything downstream on the part of municipalities.”

In an update on the Electricity Availability Factor, the minister once again dispelled the notion that load shedding was suspended because of the elections.

He said Eskom had provided scenarios that should the amount of megawatt losses as a result of inefficiencies be 14000 and below, there would be no load shedding.

He said they were not burning diesel to levels that were unacceptable.

“If you were to look at the diesel we spent in the same period last year compared to now, we have saved R6.2 billion as a result from April 1, 2024 to June 30, 2024 compared to April 1, 2022 and June 30, 2023.

“There is nothing about diesel that is anchoring the kind of performance that we see. It has all to do with performance of these coal-powered power stations and the work done by the team so we are able to address the situation going into the future.”

He lamented “energy poverty” where people cannot afford the cost of electricity due to increases in tariffs.

“The electricity pricing structure erodes significantly the ability of households to be able to afford. We are gradually eroding the income base of households.

“The rich buy solar panels, inverter batteries and are able to harvest the sun to meet energy requirements. The poor can't do that.”

Following the briefing, energy expert Chris Yelland said the minister had been rewarded for his success with much wider responsibility in energy and electricity, not just ending load shedding.

Yelland said the rapid increase in tariffs had always been a question that had not been addressed.

“I don’t think he has answers yet. He is not putting his head in the sand. He is starting to confront the issue. For far too long we pretended the problem did not exist,” he said.

“The question of how municipalities and local government are funded through the National Treasury and rates and taxes need to take a new relook. The current model is not working.

“The National Treasury should take the blame for burying its head in the sand. What we see is a symptom of wider problems just like water, sanitation and sewage.”

DA spokesperson on electricity and energy Kevin Mileham said Ramokgopa should get his counterparts in Cogta and Finance to deal with some of the problems in local government such as the debt owed to Eskom.

Cape Times