Eskom are attempting to recoup monies owed to them by local municipalities, but one municipality in particular is making it incredibly hard to achieve that task.
The state owned entity are struggling to retrieve the R34 billion it is currently owed by defaulting municipalities – Soweto, in particular, is making that task all the more difficult.
In 2018, Eskom’s financial losses took its biggest hit. Irregularities left the state owned enterprise floundering in the doldrums of gross incompetence. Dubious coal shortages, failed maintenance plans, industrial action and serious corruption are just a few of the serious problems Eskom has at hand.
This year, the knock-on effects will be felt the hardest as Eskom looks to increase the cost of electricity by 15%.
The power utility says the tarrif increase is an attempt to recover financial failings, however it hasn’t increased its operational capacity, leaving them on the brink of failure.
Soweto owe more than double its total national municipal debt
Last year it was reported that Soweto, under the City of Johannesburg Metropolitan Municipality, owed Eskom a shocking R15 billion, but that amount has only increased. According to Eskom’s chief financial officer, Calib Cassim, that has now risen to R17 billion due to non-compliance of residents, who are refusing the installation of prepaid electricity meters.
Eskom’s other biggest muncipal defaulters owe the power utility a total of R7.5 billion while Soweto houses more than double the state owned entity’s national debt.
Cassim explained that the firm’s muncipal debt threatens the very stability of Eskom’s already uneasy operational capacity:
“Rising municipal debt coupled with Eskom’s poor financial and operational performance pose a systemic risk to the sustainability of the company.”
Eskom’s general manager responsible for customer services, Thys Möller echoed Cassim’s concerns, adding that, in the last 18 months, municipal debts had risen by 80%.
“Municipal debt continues to rise, and this has become unsustainable. Municipal debt is no longer just an Eskom problem, it is a national problem. Eskom continues to participate in the inter-ministerial task team process with a view of finding lasting solutions together with other stakeholders.”
The way forward for Eskom
While Eskom’s plan of action to recuperate its losses remains a mystery, the Eskom board has promised swift action against defaulters – including Soweto.