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Non-payment for electricity at municipal level is a major escalating threat to Eskom and the country’s fiscus, but nonpayment for water is still a far larger and more endemic problem.
Cooperative Governance and Traditional Affairs Minister Zweli Mkhize told Parliament last week that overdue municipal debt to Eskom had reached R13.57 billion by the end of March.
City Press has seen an internal presentation by Eskom executives from last month showing that this had grown by roughly another R700 million by the end of June.
If you ignore the debts that have already been impaired, the municipal debt was R15 billion by the middle of the year.
This number has grown by 50% in only a year.
Underpinning the crisis is a mirror-image situation within municipalities, where authorities are not being paid for services by residents.
Municipal financial data from National Treasury shows that municipalities had about R9.5 billion in long-outstanding power debts owed to them by residents at the end of the 2017 financial year, which was June 30.
These are accounts more than 90 days in arrears and the numbers correspond roughly to the municipalities’ own arrears to Eskom at the time.
When it comes to water, however, the outstanding debt older than 90 days was a staggering R33.6 billion over the same period.
While municipalities had impaired or written off electricity debt of R2.2 billion, they had also scratched out R10.6 billion in water debt.
If municipalities don’t get paid, they can’t pay the bulk suppliers – Eskom and South Africa’s water boards.
The major provider of bulk water to municipalities in South Africa’s economic heartland, Rand Water, has impaired old debts of R1.5 bilion in its past three financial years, according to its annual reports.
Bulk water supply, however, does not bind the government through multibillion-rand guarantees and there is also no central monopoly for water where all the bad debts are pooled together.
In Mkhize’s presentation to Parliament last week, the most Eskom-indebted municipalities were called out.
Top of the list are the Maluti-a-Phofung and Matjhabeng local municipalities, both in the Free State.
They owe Eskom R2.8 billion and R1.8 billion, respectively.
The hopelessness of these debts is illustrated by the fact that Matjhabeng’s Eskom debt is equal to 78% of its annual operating revenue, while Maluti-a-Phofung’s is 68%.
