Three provinces account for 80% of R9bil debt owed to Eskom


Three provinces across South Africa account for 80% of the huge R9.4 billion in fees owed to Eskom by the end of the 2016/17 financial year.

This is according to the power utility’s financial results released today.

“Despite our efforts to ensure that customers pay their accounts on time and entering into reasonable payment arrangements where necessary, we still
experience a significant challenge with arrear debt across all customer segments, with municipalities and Soweto small power users (SPUs) being the
largest defaulters,” Eskom said.

Approximately 61% of its total electricity debtors were considered overdue by March 2017, compared to the 57% in March 2016.

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Total municipal arrears debt (including interest) has increased to R9.4 billion, up from R6 billion in 2016. Arrear debt refers only to overdue amounts, excluding interest, and not the total amount due.

The top 20 defaulting municipalities contributed R7.4 billion to municipal arrear debt , or approximately 79% of the total arrears.

Eskom added that 80% of the municipal arrears debt is concentrated in the Free State, Mpumalanga and North West municipalities, contributing 49%, 22% and 9% respectively.

At year end, 18 of the top 20 defaulting municipalities had individual overdue debt greater than R100 million each.

The top three Free State municipalities account for almost R3.7 billion of the total outstanding debt.

Eskom has in the past battled to get debt owed to it by top defaulting municipalities, and has had to resort to drastic measures such as taking the legal route and threatening mass rolling power cuts.

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Afri-Forum tried to halt the power cuts by interdicting Eskom in late 2016, but the High Court ruled in Eskom’s favour in January 2017, concluding that it may disconnect non-paying municipalities.

However, the Minister of Public Enterprises, Lynne Brown, requested that we put the interruptions on hold until 31st January  2017, to afford municipalities more time to conclude payment agreements or settle their debt.

“During January and February 2017, we intermittently interrupted supply to four municipalities in the North West Province, two in the Northern Cape and two in Mpumalanga. Interventions between the then Eskom Interim Group Chief Executive and the Premiers of North West Province, Free State and Mpumalanga took place during January and February 2017 to address the outstanding debt,” Eskom explained.

“At year end, we had concluded 66 payment agreements with defaulting municipalities, with adherence being closely monitored. Only six payment arrangements have been fulfilled. Of the 60 remaining agreements, 31 are being fully honoured and 20 partially honoured, with nine payment
arrangements not being honoured. However, only seven of the top 20 defaulting municipalities are honouring their payment agreements,” Eskom said.

The power utility said installing prepaid meters is one of the ways its hopes will avoid having mass power cuts that will affect all residents of defaulting municipalities, especially business and public service entities.

Eskom’s Chief Financial Officer, Anoj Singh, said the company’s earnings before interest, taxes, depreciation and amortisation (EBITDA), which is a measure of a company’s operating performance, surged 14.4% to R37.5 billion in the year-ended 31st March 2017, up from R32.8 billion in same period last year.

Revenue rose 8% to R177 billion (2016: R164.2 billion), driven largely by a 12.1% increase in export sales and a 9.4% tariff increase that was granted by the energy regular, Nersa, last year.

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