A task team set up to tackle the nonpayment of Eskom debt by municipalities has made significant progress, Cooperative Governance Minister Des van Rooyen said on Thursday.
Municipalities are under enormous pressure due to nonpayment of electricity bills. Earlier this year, Eskom threatened to cut power to several municipalities that owed it just more than R10-billion in debt.
Delivering his budget vote speech in Parliament, Van Rooyen said lots of work had been done in the past few months to deal with the excessive growth of municipalities’ debt, to the tune of R117-billion as at December 31 2016.
Van Rooyen said national departments owe municipalities R2.3-billion, while provincial departments owe R3.1-billion. The department was gravely concerned about the excessive growth of debt owed to municipalities.
The cash-flow problems faced by various municipalities have made it difficult for them to deliver services and pay creditors, including Eskom.
“The work of the national task team on government debt is making progress in resolving the historical debt and government departments have made commitments to adhere to their current debt,” said Van Rooyen.
The task team would soon make short, medium and longterm recommendations to address the payments crisis.
Van Rooyen said the culture of nonpayment in society was now becoming a “pandemic”.
“This culture of nonpayment has also extended to municipalities themselves as certain municipalities have become persistent defaulters to their creditors.” As of the end of December 2016, the total creditors amount was R34.6-billion, of which Eskom and water boards were owed 77% of this figure.
Poor revenue management meant that payments due to creditors far exceeded the revenue collected, said Van Rooyen. The department was working with municipalities to implement revenue plans in order to ensure proper internal controls to protect revenue and improve collection.
“Last year we drew up recovery plans and improved municipalities’ payments to Eskom,” he said, but that had not resolved all the challenges facing municipalities.