Municipalities now owe Eskom a hefty R63.2bn, up R4.7bn on a year ago. Electricity minister Kgosientsho Ramokgopa says this is eroding Eskom’s bottom line and reducing the power utility’s ability to invest in the infrastructure needed to solve the electricity crisis.
Addressing the media on Sunday, Ramokgopa said that due to poor maintenance of distribution infrastructure owned by Eskom and municipalities that connects homes and businesses to the grid, electricity users experience long power cuts outside load-shedding.
Distribution infrastructure owned by municipalities has suffered years of underinvestment. Ramokgopa said municipalities are underspending on maintenance by about R2.5bn a year, resulting in a backlog in maintenance and replacement spend of more than R30bn. “This is why we have communities that sometimes have to go for weeks without electricity.
“There are many communities where transformers and substations have failed because demand exceeds the installed capacity that can be delivered by this equipment.
“Those assets can’t sustain the demand and pressure that is placed on them,” he said.
The problem is worsened by the increase in illegal electricity connections and nonpayment by legal users. These issues are contributing to the “overburdening” of distribution infrastructure and the failure of transformers and substations.
Failing assets
“There are communities sitting without electricity, not because of load-shedding but because of failures or transformers and substations.
“When we get to a situation where we have solved load-shedding, it doesn’t necessarily mean that communities will have [uninterrupted access to] electricity, as a result of the failing of these assets.”
The “inordinate amount of money” municipalities owe Eskom, and the rate at which this debt is increasing, undermines Eskom’s ability to invest in the upkeep and replacement of infrastructure.
Though Eskom and the National Treasury are working with the ministry to find a solution to troubles plaguing municipal distribution networks, municipal debt owed to Eskom “remains the elephant in the room”, said Ramokgopa.
Earlier in 2023, the Treasury flagged rising municipal debt as a major risk to the success of the R254bn Eskom debt relief package, which was announced during the 2023 budget by finance minister Enoch Godongwana.
In response to this, the Treasury launched a plan in May that would allow municipalities to have a third of their debt owed to Eskom (as at March 31) written off per year over three years.
But the municipalities would have to adhere to strict conditions attached to the debt relief.
Ramokgopa said 13 municipalities have so far applied for the programme, and seven of these have been approved.
For approved municipalities, a third of the total debt owed will be written off, if they have complied with the conditions for 12 successive months.
One of the conditions is that municipalities have to keep up with current payments to Eskom.
Participating municipalities are also expected to progressively install smart prepaid meters.
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