Municipalities R2.7billion in arrears

Municipalities owed Eskom a total of R11.4 billion at the end of last month, but only R2.7bn of this is in arrears, power utility Eskom said on Wednesday.

"As at end July, total current accounts equal R8.7bn; arrears equal R2.7bn," Eskom acting spokesman Andrew Etzinger said in an e-mail sent to Sapa.

He was responding to questions on reports that municipalities around the country owed Eskom R10.8bn at the end of June this year.

This total was given by Co-operative Governance Minister Pravin Gordhan earlier this week in a written reply to a parliamentary question.

Asked to what Eskom attributed the apparent steep rise in municipalities' power bills, Etzinger said: "In the main, debt is increasing due to inability of some municipalities to fully recover revenue within their service territories."

According to reports, the amount municipalities owed Eskom in October last year totalled R3bn.

However, Eskom was hopeful most of the arrears would be sorted out by the end of the month.

"We are hopeful that the matter will be resolved by end August, with either payment or a reasonable payment plan forthcoming."

On whether the utility would start getting tough with municipalities that did not pay on time, he said Eskom issued disconnection notices to three Free State municipalities last month.

"Cut-offs were averted through intervention by national government," Etzinger said.

In his written reply, Gordhan said his department had been "engaging with all parties concerned to find a constructive solution to the challenge".

According to Gordhan, the biggest debtor was City Power, of the City of Johannesburg, which owed R1.075bn.

The parliamentary question was posed by Inkatha Freedom Party MP Mkhuleko Hlengwa.

In a statement posted on the IFP's website this week, Hlengwa said the amounts owed were shocking and worrisome.

"KwaZulu-Natal municipalities owed R1.27bn, Limpopo municipalities collectively owed R314 million, Mpumalanga municipalities owed R135m, North West owed R764m, Northern Cape municipalities owed R225m, and Western Cape municipalities owed R1.27bn."

Further, the Ekurhuleni metro owed R972,339, the City of Tshwane metro R793,000, the Nelson Mandela Bay metro R292m, the Buffalo City metro R128m, the eThekwini metro R813m, the Msunduzi municipality R146m, and the City of Cape Town metro R873m.

"These exorbitant amounts owed to Eskom are an indication of great failure on the part of municipalities to manage their debt in an orderly and systematic manner. There is obvious incapacity in terms of basic financial management," he said.

In a statement on Wednesday, the City of Ekurhuleni denied having an outstanding Eskom account.

"Every single bill received from Eskom, totalling R7bn in the 2013/14 financial year, ending June 30 [this year], was paid in time," said spokesman Themba Gadebe.

According to Gordhan's reply, it owed R972,339,161 on that date.