Eskom writes off R5.3 billion of Soweto’s R13 billion electricity debt
Share this article:
Debt owed by Soweto residents to Eskom has decreased to R7.5 billion in 2021 from R12.8 billion last year, but this was because the power utility wrote off R5.3 billion.
Eskom indicated that the total invoiced Soweto debt had decreased to R7.5bn, including interest, by the end of March this year, down from R12.8bn last year.
However, of the debt owed by residents of the country’s biggest township, only R536 million was deemed collectable, and the sprawling township has a payment level of only 20.6%.
“The reduction in Soweto debt is mainly due to the write-off of prescribed debt of R5.3bn and write-back of non-compliant in duplum (double the amount) interest of R3.3bn,” Eskom states in its 2020/21 annual report released this week.
Eskom has promised to deliver on its municipal debt management strategy and pursue active partnering agreements to slow the growth in arrear debt, and to leverage its relationship with the government and the power utility’s political task team to achieve sustainable solutions to the recovery of municipal and Soweto arrear debt.
The top 20 defaulting municipalities account for 81% of total arrear municipal debt of R35.3bn, with more than 38% owed by municipalities in the Free State.
By the end of March, there were 47 municipalities with total arrear debt of more than R100m each.
According to Eskom, this has grown considerably during recent years and demonstrates the pervasive nature of the problem.
Eskom stated that although arrear municipal debt has grown rapidly over the past few years, Soweto’s debt has increased at a slower rate.
Because Soweto power consumers comprised tens of thousands of residential customers, it was a much greater challenge to manage and collect individual outstanding amounts compared to the few hundred municipal customers.
The Eskom board has granted its management approval to engage with the City of Johannesburg for the proposed transfer of customers in Eskom’s licensed areas of supply, including Soweto and Sandton, to City Power.
“Negotiations have commenced; the Soweto debt balance, regulatory processes, as well as social, human resource and financial implications, are being considered,” Eskom said.
Soweto residents’ troubles with Eskom have led to several protests over the years and have resulted in them demanding to pay a R100 monthly fee for electricity.
Meanwhile, energy company Electricidade de Moçambique (EDM) is Eskom’s only international arrear debtor, with R449m outstanding and 96% is overdue.
Eskom and EDM have agreed that only the disputed amount of R350m will be subject of mediation currently under way, and the remaining debt will be settled in terms of a debt repayment plan concluded in April last year.