Eskom, SCOPA and TCLM

Municipal

Michele du Plessis

The Standing Committee on Public Accounts (Scopa) met with the top 10 municipalities that are owing Eskom about R10 billion of the R13 billion electricity debt that is owed by municipalities to Eskom.

Thaba Chweu Local Municipality is one of these municipalities. The TCLM delegation consisted of Selina Mashego-Sekgobela, Executive Mayor, Thoka Kgoale, Municipal Manager, Sinenhlanhla Manqele, Acting Director Technical Services and Michael Mashilo, Acting Deputy CFO.

This meeting stems from a meeting Scopa had with Eskom, Salga (South African Local Government Association) and the Department of Cooperative Governance and Traditional Affairs on this issue on 15 May 2018.

Scopa felt the need to meet with the top 10 municipalities who are failing in this regard before its meeting with the Inter-Ministerial Task Team on the very same issue. Scopa wanted to understand the challenges that are faced by municipalities which are causing the municipalities to fail to settle their debt. All the municipalities raised several challenges, including the challenge of illegal connections in communities.

Municipalities raised several challenges, including the challenge of illegal connections in communities, the high unemployment rate which leads to people not able to pay the municipality while the municipality continues to provide electricity, ageing infrastructure and debt collectors who are overcharging municipalities.

The current population is 101 895, population growth rate of 0.8% per annum (2016) and the current indigent registration is recorded at 4580 as at May 2018. The municipality experience economic in-migration due to job opportunities in mining and forestry sectors – which also attract illegal immigrants (resulting in the mushrooming of informal settlement). Unemployment and Low household income – although significantly lower than the national average, declining of economic sectors – mining, agriculture and forestry and export-oriented economy – no beneficiation.

Ageing infrastructure – dilapidated roads affecting the local economy, escalating Eskom Debt and power interruptions affecting the local economy and the culture of non-payment of services attributes to the escalating Eskom debt.  Informal Settlement – land invasion leading to the illegal connection of basic services and the negative Audit Opinion (Disclaimer opinion) are also cited. Other challenges are the exclusivity of the Tourism Sector – limited transformation in the tourism sector.

The total active accounts with electricity charges are 15 597 households, while the total households are 37 210; ± 21 000 households are Eskom customers (this mainly includes Leroro, Matibidi, Moremela, Coromandel, Draaikraal, Shaga and Farms). These customers are the main defaulters in paying municipal services: Government:    R15 902 259.45; Business: R 11 224 799.60; Households: R 128 854 817.64 and Farms: R 126 850 896.70. The accumulated total cited by TCLM in the presentation is R 282 832 773.38.

Municipalities have also raised challenges of not being assisted by police when they report cases of these illegal connections by people who seem to be operating like gangsters, who have weapons and are a danger to municipal officials.

Scopa has been informed that due to the fact that these municipalities are involved in court battles with Eskom, big businesses in those areas have made arrangements to pay Eskom directly to avoid being affected. This has also impacted municipalities negatively in terms of revenue collection and they depend on businesses as well for profits from the revenue they collect.

Scopa has, however, told the municipalities that it needs to recommit to paying Eskom as Eskom is a state-owned entity that contributes to the economy of this country. Scopa has also raised issues of contravention of supply chain management processes, which has led to financial mismanagement in most of these municipalities that are in the top 10. Scopa has also encouraged these municipalities to engage with Eskom in making payment arrangements on the debt.

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