MEDIA STATEMENT
Johannesburg, South Africa, Sunday, 27 October 2024 — Public Interest SA expresses deep concern over the escalating municipal debt crisis impacting Eskom, as recent reports indicate that an overwhelming majority of municipalities have failed to honour their debt commitments. This dismal rate of compliance with Eskom’s debt relief incentive scheme reflects a critical breakdown in financial accountability at the municipal level, further endangering Eskom's financial sustainability and the national energy grid's stabilisation efforts.
The Minister of Energy and Electricity, Dr Kgosientsho Ramokgopa, and the South African Local Government Association (SALGA) must take decisive action to hold municipalities accountable for their fiscal responsibilities to Eskom. Public Interest SA calls upon SALGA to collaborate more rigorously with Eskom to address this urgent matter. The lack of adherence to payment obligations by municipalities exacerbates Eskom's operational pressures, amplifies its debt burden, and directly undermines efforts to stabilise and sustain the power grid.
Eskom CFO Calib Cassim recently warned that municipal arrears are projected to reach R120 billion by 2025/26 if left unchecked. The gravity of this situation is underscored by the fact that the current R254-billion Treasury bailout will be insufficient if municipal debts continue to escalate. Failure to address this burden will not only jeopardise Eskom’s operational viability but will also necessitate additional financial rescues from Treasury, at significant cost to the South African public.
The present municipal debt trajectory poses a direct threat to Eskom’s ability to provide stable, affordable power to the nation. Furthermore, to compensate for unpaid bills, Eskom’s proposed tariff hike for 2025/26 includes a 2.5% provision for arrears—a cost unfairly shifted onto compliant customers. This untenable approach risks alienating paying consumers and places an undue financial burden on households and businesses alike.
Public Interest SA will be submitting detailed recommendations to the National Energy Regulator of South Africa (NERSA) as part of its upcoming public hearings. These submissions will call for structural reforms that ensure municipalities uphold their debt obligations to Eskom. This is crucial not only for Eskom’s financial recovery but also to prevent repeated cycles of state bailouts that drain the nation’s fiscal resources.
South Africa cannot afford to allow systemic municipal non-compliance to destabilize Eskom further. Public Interest SA urges SALGA, NERSA, and the relevant government authorities to enforce strict accountability measures for municipalities and to support Eskom’s mission to build a sustainable and reliable energy future for all South Africans.
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For media inquiries, please contact:
Bagaetsho Oteng
Media & Communications
bagaetsho@publicinterest.org.za | 010 005 5884