Maluti-a-Phofung in the Free State is one of the poorest municipalities in SA yet it owes Eskom close to R3bn.
It is one of the local municipalities drowning in debt, according to co-operative governance minister Zweli Mkhize.
The debt will now escalate for those municipalities in North West, Gauteng and Limpopo that are caught up in the fraud and theft at the VBS Mutual Bank.
Maluti-a-Phofung, which encompasses what was the QwaQwa homeland under apartheid, lies on the foothills of the Drakensberg in the eastern Free State.
It was singled out by Mkhize as the worst electricity payments defaulter in the land. The total debt owed by local municipalities to Eskom is R14bn.
Mkhize was bemoaning a "widespread 'culture' of nonpayment by consumers" when Maluti-a-Phofung came up in his recent briefing to the ANC's national executive committee.
The report, which the Sunday Times has seen, reveals that a significant number of municipalities are failing to perform "basic legislative responsibilities". Accompanying slides showed spilt sewage, broken pipes and collapsing infrastructure.
Mkhize said there were also problems with ageing infrastructure that led to "high electricity and water" losses.
He blamed political instability in municipalities for the collapse of services. The high turnover of councillors also impaired institutional memory and capacity.
Mkhize's department evaded questions on the contents of the report. Department spokesperson Musa Zondi said because the report was presented at an ANC meeting (this despite it being compiled by the department and presented by the minister) it would be "appropriate" to consult the party.
Mkhize was not available for comment.
He told the meeting he had appointed an advisory panel to make recommendations to lift municipalities out of debt.
These would include a "strong provision of free basic services" and a campaign to promote a culture of payment. It is not clear what Mkhize means by "strong provision", and if criteria for deciding who qualifies as an indigent consumer will be reviewed.
The report shows that more than 70% of councillors were newly appointed after every local government election. This led to a loss of institutional memory, new priorities, no continuity and no alignment to long-term development - all of which had a detrimental effect on service delivery.
"Political instability appeared to be the main factor contributing to turnover. Municipalities which enjoy political stability tend to be characterised by a more settled and mature political and administrative leadership," his report says.
The most deprived areas of the country in 2001 were the former homelands, the report says. These are still the poorest.
Mkhize's presentation was largely based on a 2016/2017 report by the auditor-general which showed that vacancies and instability in key municipal positions slowed down systematic and disciplined improvements.
There were also concerns about inadequate skills and political infighting at council level, as well as interference in the administration, which weakened oversight. This led to a disregard of controls and compliance with legislation at some municipalities and "enabled an environment in which it would be easy to commit fraud", the report says.
On the question of how to deal with the loss of R1.5bn in municipal funds invested in the VBS Mutual Bank, Mkhize recommended that affected municipalities find alternatives for planned capital projects and operational programmes.
He said they needed to implement a communication strategy "in order to be transparent and avoid the community unrest"...