It is perhaps unfair to call the National Treasury’s debt relief programme for municipalities that owe Eskom a failure before it has even been fully implemented. But it is already clear that even if the programme does succeed in writing off some of the billions of rand in arrears owed, the fundamental problem will remain unresolved.
Since the Treasury initiated the programme for municipalities in May 2023, the amount owed to Eskom has increased by R20bn to R75bn.
When the programme was introduced, the Treasury emphasised that the debt relief conditions would specifically address underlying issues such as poor revenue collection. To put an end to the detrimental cycle of nonpayment, where municipal customers fail to fulfil their payment obligations, which leads to municipalities not having enough funds to pay Eskom, participating municipalities are required by the Treasury to progressively install smart meters. They are also required to achieve an 80% collection rate from April 2024 and 95% from April 2025.
But the Treasury takes for granted that municipalities are functioning in a way that will allow them to implement these changes, when in truth many have become largely dysfunctional.
Without a complete overhaul of the municipal funding model and putting in place competent leaders, this debt write-off will be an expensive mistake that will leave Eskom and taxpayers worse off.
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