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Tshwane in trouble with Eskom for outstanding debt of R878 million

Tshwane officials cut the water and electricity supply to defaulters. Picture: James Mahlokwane

Tshwane officials cut the water and electricity supply to defaulters. Picture: James Mahlokwane

Published Jul 5, 2022

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Pretoria - The City of Tshwane is in trouble with Eskom for its outstanding debt of R878 million owed to the power utility.

This was made known by Eskom after the City failed to settle a total amount of R908 million, which was due and payable by June 17 2022.

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The municipality, according to Eskom, only made a payment of R10m on June 23 and R20m on June 30.

In a media statement, Eskom said it rejected Tshwane’s offer to enter into a payment settlement arrangement for the R878m.

“As part of the efforts to recover the debt, Eskom has previously escalated the matter of the City’s erratic payments to the Tshwane Executive Mayor, Randall Williams in a meeting held with him and his leadership team in January,” the power utility said.

It further indicated that the matter was again escalated to Williams in June, “requesting him to assist in ensuring that the City settles the account by June 30 2022”.

“Out of the eight metropolitan municipalities in the country, the City of Tshwane is the only one with erratic payments,” Eskom said.

It pointed out that the City’s erratic payments over the past year have contributed negatively to Eskom’s increasing overdue debt (which is in excess of R46.6 billion) liquidity, financial performance, and the sustainability of the organisation, such that Eskom has to borrow to meet its financial commitments.

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Eskom Senior Manager for Customer Services in Gauteng, Daphne Mokwena said: “As a utility, we are obliged to operate this business in a sustainable manner, and to consequently take all the appropriate measures to recover money owed to us. We remain hopeful that the City will review its current position regarding the appeals made to them by Eskom and honour their payments.”

City’s spokesperson Selby Bokaba said: “The City has communicated with Eskom and provided them with a payment schedule of our debt. We have experienced liquidity challenges occasioned by low revenue collection in the previous financial year.”

He said the municipality was anticipating an improved level of collection in the first quarter of the 2022/23 financial year and beyond following the relaunch of our aggressive revenue collection campaign known as #TshwaneYaTima, which resumed on June 21.

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“Already this campaign is showing positive signs with our debtors coming forward to make payments after we had disconnected their services. The city will ensure full payment to Eskom by Thursday July 7 2022. It’s important that our customers pay their accounts in full and on time to enable us to pay our creditors like Eskom and others,” Bokaba said.

In the latest Municipal Finance Management Act report for 2020/2021, the Auditor-General Tsakani Maluleke said: “As cash-strapped consumers fall behind on paying municipal rates and taxes, credit-rating agencies are flagging an increased concern around the likelihood of metros being unable to meet their debt payments or source cash from capital markets to meet future obligations due to falling revenues.”

Maluleke said the debt of metros that was unlikely to be recovered in full ranged from 53% to 88%.

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“Although some of these metros have cash reserves, its further use to make up revenue shortfalls will reduce the metros’ capacity to meet future debt obligations as they fall due,” she said.

Pretoria News

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