Eskom
The financial crisis in Gauteng’s municipalities shows no signs of slowing down, as the City of Tshwane (CoT) and Ekurhuleni (CoE) jointly owe Eskom R4.7 billion as of August 31, 2023.
CoT alone has racked up a staggering debt of about R3.2 billion over the past two months due to irregular payment patterns.
Cooling towers at a coal-based power station owned by state power utility Eskom in Duhva, South Africa, February 18, 2020. REUTERS/Mike Hutchings
Meanwhile, CoE’s debt is just shy of R1.5 billion. These escalating debts have raised serious concerns about Eskom’s liquidity, financial performance, and sustainability.
The situation with CoT is particularly alarming, with erratic payments dating back to 2022.
“Equally troubling is CoE’s habitual late settlement of accounts over the past six months. Despite Eskom’s best efforts to recover these outstanding payments and ensure compliance with electricity supply agreements, both municipalities have failed to meet their obligations.” said Eskom
In response to these concerns, the City of Tshwane has released a statement reaffirming its commitment to addressing its financial woes. Acknowledging that they are indeed behind on payments to Eskom, the City emphasizes the challenging decisions that its Council, Mayoral Committee, and management are undertaking to rectify the situation.
“The City’s adopted budget for June 2023 is already underfunded by at least R3 billion. Consequently, the Council has approved a funding plan that aims to achieve a funded status within three financial years. One of the measures outlined in this plan is seeking exemption from salary increases, even in the face of potential strike action.”
“It is worth noting that the City’s financial distress is not unique but is prevalent among many municipalities in the country. Contributing to this dire situation is the increasing frequency of load-shedding, which has disrupted the maintenance of the City’s electricity network and negatively impacted its funding model. During load-shedding, electricity sales come to a halt, making it difficult to cover the fixed costs associated with network operation.”
“Furthermore, the tariff approved by the National Energy Regulator of South Africa (Nersa) for the resale of electricity does not adequately cover the City’s costs. To address this discrepancy, a cost of supply study is underway to inform the City’s submissions to Nersa for the next financial year.” said the City
“In efforts to become less reliant on Eskom, the City has unveiled plans for greater energy independence. These measures were announced by the Executive Mayor in recent months, signaling a proactive approach to mitigating the impact of Eskom’s debt.”
“During the most recent Council meeting, a relief application for the City’s Eskom debt was approved in line with the framework established by the National Treasury. If accepted, this application would provide significant relief to the City’s cash flow and overall financial situation. The City remains fully committed to its financial rescue mission, as outlined by the Executive Mayor.”
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