Debt owed by municipalities by Eskom has since grown from R44.8 billion to R49.1bn between March and July 2022. Photo: EPA, KIM LUDBROOK.
Eskom has a savings target of R61.8bn by 2023 helping the provider to absorb the increase in diesel costs and the wage bill.
Deputy President David Mabuza has warned that SA’s municipalities continue to owe Eskom billions of rands in outstanding debt, further crippling the struggling power utility’s financial position.
Mabuza yesterday told Parliament that the total debt owed to Eskom by various municipalities had ballooned by nearly R5 billion in just four months to July.
“Debt owed by municipalities to Eskom remains a major challenge to the entity's financial stability,” Mabuza said.
“Debt owed by municipalities by Eskom has since grown from R44.8 bn to R49.1bn between March and July 2022.
“This is not a desirable state of affairs for Eskom and municipalities.”
Mabuza was answering oral questions from Members of Parliament in the National Council of Provinces (NCOP) in his capacity as the chairperson of the Political Task Team on Eskom.
He was also updating Parliament on progress by the government's National Energy Crisis Committee in improving energy security following severe breakdowns at Eskom’s ageing power plants.
Mabuza said the committee continued to help Eskom improve revenue collection and enter into service-level agreements with municipalities.
This includes Maluti-A-Phofung local municipality in the Free State, which owes Eskom R6.5bn.
Mabuza said that while successful debt recovery from municipalities would help Eskom reach its savings target of R61.8bn by 2023, they would not necessarily reduce electricity tariff increases.
However, he said the savings would help Eskom to absorb the increase in diesel costs and the wage bill.
“Eskom is suffering because consumers are not paying for electricity and there are many illegal connections. We need to encourage people to pay for the services they receive, for the sustainability of Eskom,” Mabuza said.
“As part of internal cost efficiencies and equity conditions, a cost savings target of R21.4bn for the 2023 financial year, and a cumulative R61.8bn over the medium-term of 2020 to 2023, has been set by Eskom.”
Mabuza also said the government was taking every step to make sure that Eskom was supported in its bid to stabilise the national grid and ensure energy security.
“The political task team was also seized with expanding the correction of plant defects at Medupi and Kusile power stations in order to ensure that the grid has an additional 1000MW of base load capacity to address the load shedding problem,” he said.
Mabuza acknowledged that even though strides have been taken to assist Eskom in keeping the lights on, some challenges remained.
“In the main, challenges [are] set around the limitation of the ageing fleet [and] inability to keep up with the demands of unplanned maintenance and repairs. Inevitably, inadequate energy capacity [has] resulted in declined energy availability.
“This led to the sustained power outages in the month of July, thereby attracting public backlash and that prompted the urgent dedicated Cabinet discussion on further extraordinary measures to immediately bring to a halt what was becoming a perennial national electricity supply challenge.”
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