Finance minister Enoch Godongwana appears to be frustrated at the obstacles in the way of addressing the municipal financial crisis which has seen municipalities owing Eskom about R85bn and R23.7bn to the seven water boards
The minister indicated in a written reply to a parliamentary question that attempts to address the crisis had failed to bear fruit.
For example, he said many of the municipalities that had applied to participate in the debt relief programme were failing to enforce credit controls and “therefore simply do not collect enough to pay Eskom and other creditors, or where they collect enough, diverge (divert) funds to other priorities instead of paying Eskom”.
“Ultimately, if the council persistently fails to embrace the opportunity offered through debt relief, their participation could lead to termination from the programme and Eskom can institute strict credit control through the legal route to collect what is due.”
Seventy-two of the 257 municipalities signed up for the municipal debt relief programme introduced in May 2023 and undertook to write off Eskom debt over three years provided municipalities adhered to set conditions, including that they pay current payments. They would also have to maintain a minimum average collection of amounts due by consumers and progressively install prepaid meters.
By last month only 14 of the 72 were adhering to the conditions, according to a report by News24. In August electricity and energy minister Kgosientsho Ramokgopa said 78% of the municipalities had defaulted.
Ultimately, if the council persistently fails to embrace the opportunity offered through debt relief, their participation could lead to termination from the programme and Eskom can institute strict credit control through the legal route to collect what is due.
— Enoch Godongwana, finance minister
Even though the programme has had limited success so far, Godongwana said in reply to a question by DA MP Dennis Ryder that the National Treasury would not reconsider it.
“Municipal (Eskom) debt relief is an extraordinary support that aims to alleviate the financial crisis in participants owing Eskom by way of ring-fencing the municipal relief debt in conjunction with the permanent suppression of interest thereon. This unlocks some fiscal space in participating municipalities.
“If a municipality restores the minimum financial management best practices embodied in the Municipal Finance Management Act and Municipal Systems Act as required in terms of their debt relief approval, it should assist the monthly payment of Eskom and water boards and other creditors.”
Another initiative which has failed to get off the ground was to find a wider national solution and an integrated government approach to the municipal crisis, which includes a water delivery crisis.
No consensus
Godongwana said Treasury facilitated several engagements across provinces with the department of co-operative governance and traditional affairs and the SA Local Government Association.
“To date, there has been no consensus on the integrated stakeholder approach or decisions needed. The recently established interministerial committee for local government could play a critical role in facilitating the integrated approach.”
Godongwana also noted provincial governments were empowered in terms of the constitution to intervene when municipalities fail to manage their finances.
“The minister of finance previously, and again recently, requested the relevant provincial executive to institute the appropriate mode of intervention, but the provincial uptake has been slow. Constitutionally, only if the provincial intervention fails is it appropriate for national government to step in.”
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