Eskom has no immediate plans to sell electricity directly to all consumers and bypass municipalities completely.
This week MPs claimed the move would mitigate the power utility’s mounting debt owed by municipalities. But the suggestion was rejected by Eskom as well as at least two municipalities in Johannesburg.
Eskom deputy spokesperson Dikatso Mothae said it would be difficult to sell electricity directly to consumers as it did not have the infrastructure to do it.
“We can’t assume that all municipalities charge their customers more than Eskom. Yes, some of them do, but we cannot have a blanket statement that electricity would be cheaper. Electricity prices are set by Nersa.”
Municipalities generate more than 63% of their revenue from electricity supply to households and businesses across the country. The power utility is owed more than R27billion by several municipalities.
Energy expert Ted Blom said the suggestion would plunge municipalities deeper into a “quagmire”.
“This will cause mayhem in the supply of basic services to residents because the profit they make from selling electricity is used to subsidise things like water and sewage disposal,” said Blom.
City of Joburg Member of the Mayoral Committee for Infrastructure Nico de Jager said if the proposal was implemented it would cripple municipalities.
“The reality is that municipalities rely heavily on the revenue generated from the sale of water and electricity in order to be able to cross-subsidise when it comes to the building of roads and housing. It will bankrupt municipalities.”
Ekurhuleni Metropolitan Municipality spokesperson Themba Gadebe echoed De Jager’s sentiments.
“Municipalities need the revenue to sustain themselves and to supply services to communities. The proposal would have a detrimental effect.
“Eskom is not on the ground like municipalities; we are closer to the people and we discharge that responsibility with ease. The second factor is that we have the advantage of credit control measures; we can switch off water and electricity if consumers do not pay. Eskom does not have that.”
Co-operative Governance Minister Zweli Mkhize has also warned against stripping municipalities of their powers to directly charge for electricity. He said this idea would leave the municipalities battling to stay afloat.
“The real issue is that municipalities use electricity as revenue. If you look at the revenue of municipalities, it is 63%. If you say Eskom must collect directly and not involve municipalities, it will shut down municipalities,” said Mkhize.
“We have seen collection in prepaid meters by municipalities is 99%. But in conventional meters by Eskom it is between 38% and 40%,” said Mkhize.
A few years ago, former Eskom boss Brian Molefe proposed in Parliament that the power utility charge households and businesses directly for electricity to reduce the municipal debt.