The proposal by Soweto residents to pay a flat R100 fee for electricity is not the solution to the spiralling electricity debt of R19 billion. Picture: Henk Kruger African News Agency (ANA)

Johannesburg - The proposal by Soweto residents to pay a flat R100 fee for electricity is not the solution to the spiralling electricity debt of R19 billion that the country’s largest township owes power utility Eskom.

SA Local Government Association (Salga) chief executive Xolile George this week said the solution was not the payment of R100 as proposed by Soweto residents.

“Perhaps the answer is not the R100 proposal, it’s the complexity of the problem. Soweto alone owes (Eskom) R19bn. The interesting thing is that it is serviced by Eskom so you have a dual regime of servicing customers in the City of Johannesburg,” he said.

According to George, the complexity of the problem of spiralling Soweto debt compounds it.

He said Salga had been asking Eskom to respect the law and sign a service delivery agreement with municipalities to regulate the dual service provision, which has seen areas like Soweto being serviced by Eskom while other parts of the Johannesburg get their electricity from City Power.

“Service delivery agreements are provided for in the law, the Municipal Systems Act, that says the service authority must enter into a formal relationship with the service provider so that you can say let’s create uniformity in the tariffs, let’s create uniformity in the standards of services,” George said.

He said the current situation complicated customers’ experiences as their money bought different units of prepaid electricity.

George was confident that the structural solution of a service delivery agreement would resolve the situation and prevent the cross subsidisation of the rich instead of poor households.

Salga this week announced drastic measures to tackle the whopping R165.5bn consumers, the government and businesses owe to the country’s 257 municipalities.

The association has undertaken to go after defaulting consumers including government departments who owe municipalities R10.3bn.

According to the roadmap on Eskom recently released by Public Enterprises Minister Pravin Gordhan, Soweto residents owed the power utility about R19bn of the R36.5bn debt incurred by municipalities and individual users by the end of June.

Gordhan has warned that municipal and Soweto debt arrears to Eskom were increasing steadily and the state-owned power generator was not generating sufficient cash to cover debt service costs.

“Eskom has suffered serious financial losses as a result of non-payment of electricity accounts by certain municipalities and many Soweto residents,” states the roadmap.

At the end of March this year, Eskom’s long-term debt stood at R441bn, up from R255bn in 2014 and over the next five years interest payments of approximately R148bn and debt repayments of R180bn are anticipated.

Consumers in eThekwini owe over R11.6bn while Cape Town residents are more than R8.7bn in debt for municipal services.

With the help of the Lungelo Lethu Human Rights Foundation, 250 Soweto households whose electricity has been cut off, want to negotiate with Eskom over the next 18 to 24 months to discuss the flat rate of R100 for energy consumption.

The organisation wants to kill the culture of non-payment of services fostered by apartheid-era consumer boycotts.

Eskom, however, indicated that it could not negotiate separate tariffs or have preferential arrangements outside of prices regulated by the National Energy Regulator of SA.

Political Bureau