'Just switch off the lights': Parliament calls for concrete plans on Eskom debt

03 December 2019 - 18:56 By Andisiwe Makinana
Parliament has called on Eskom to put stronger plans in place to collect outstanding debt.
Parliament has called on Eskom to put stronger plans in place to collect outstanding debt.
Image: Business Times

Parliament's public finance watchdog wants government departments and municipalities to submit plans on how they plan to pay the billions they owe to Eskom, while calling on the power utility to cut electricity to private-sector companies.

“We need to do practical things ... Determine for us when are you going to pay. We want a payment plan for your debt. Factor it into your budget, so that come the new financial year, you've created a space for that,” said Mkhuleko Hlengwa, chair of the standing committee on public accounts (Scopa).

He said the committee would write to all ministers whose departments had outstanding debt to submit a payment plan to Scopa by the end of February 2020.

While government departments have three months to say how will they pay, the private-sector debtors will not have such reprieve.

“The issue here is we are expecting a functional state machinery ... which is able to function. Municipalities are part of the state's machinery. Eskom is a state-owned entity. National and provincial departments are part of the state's machinery. We need that as the basis upon which to move from,” said Hlengwa.

"The municipalities must turn off the lights of those companies that are not paying. Switch it off. It's like DStv: if you don't pay your DStv, you get an error message and the screen just keeps moving until you pay.

"Let's be clear about it: even before we even get the top 20 companies, just switch off the lights.”

Hlengwa's request came at the end of a three-and-a-half hour meeting on Tuesday in which the departments of cooperative governance and traditional affairs (Cogta) and public enterprises, the National Treasury, the SA Local Government Association (Salga) and Eskom appeared before the committee to talk about the escalating debt owed to the power utility.

MPs heard that government departments and municipalities owed a combined approximately R36bn to the cash-strapped SOE. Municipalities owed R26.5bn of that amount at the end of October, while provincial governments owed R5.8bn.

National government departments owed R3.4bn, with the department of public works owing a whopping R3bn of that.

Hlengwa said Scopa would seek a meeting with public works so that it can take MPs through why it had this problem and to discuss a clear way forward.

Even in the provincial sphere, the provincial departments of public works, roads and transport are the biggest defaulters - owing R3.7bn of the total R5.8bn owed by provinces. They too will have to submit their individual payment plans.

A similar request will be sent to the top 20 defaulting municipalities.

The department of public enterprises, of which Eskom is an entity, owes the company R13.2m.

Parliament will also not be spared. Scopa will also write to National Assembly speaker Thandi Modise and parliament management about the R17,000 that parliament owes the power utility.

Salga NEC member Thami Ngubane sought to defend municipalities, arguing that non-payment by municipalities to the water boards and Eskom should not be viewed in isolation, but as a manifestation of a larger problem. He said MPs should consider the underlying factors, which included non-payment for the services provided by municipalities.

“At a practical level, at the consumption level, that's where the challenges are. It's not that the people are paying municipalities and the municipalities don't pay for bulk services and use the money for other purposes. That's not the case,” he said.

"We are being owed R165bn. We owe less than R50bn in total to water boards and Eskom combined. It means the challenge is at the level of consumption, where the consumers are."

Ngubane revealed that Salga had agreed on “a radical” approach to recoup monies owed, which would target business and the government as the low-hanging fruits.

In response, Eskom acting group CEO Jabu Mabuza said Salga owed the power utility R25bn. "We need to be paid by Salga,” he said.

He explained that for every rand that municipalities owed Eskom, only 44 cents were actually paid.

“We have to collect our debt - or we have to stop supplying customers that are not paying us … We need to be paid for what we have supplied, which we are incurring costs to produce and to supply,” he said.

“We are caught up because treasury is saying, 'If you are not being run like business and the only way to run like business is, if you don't pay your bed, Joshua Doore collects your bed.'”

An inter-ministerial task team, established in 2017 to find solutions to challenges relating to electricity reticulation, has not been reconvened in the sixth administration. MPs concluded that it had failed in its work.

“The yardstick for us on the success of the inter-ministerial task team would have been a reduction in debt. It didn't happen, so as far as we are concerned it was a failure. That's the bottom line," said Hlengwa.

“All we want is Eskom's money, accountability and commitments - because in the absence of those payments, then we will have to give Eskom bailouts upon bailouts.”