Debt owed to Eskom has more than tripled to R700m in eight months, with the key culprits being cash-starved local authorities that are struggling to pay their power bills.
While the power parastatal was unable to provide updated figures for debts owed by municipalities yesterday, the figure has rocketed from about R162m in July last year.
These outstanding municipal debts are believed to now be nearing R550m. All levels of government owed almost R200m in July last year.
An extrapolation of figures indicates that about 85 percent of the total debt to Eskom has been notched up by the 283 municipalities around the country – although the main culprits are in the Eastern Cape and Free State.
In a hint of the debt mountain the entity faces, Public Enterprises Minister Malusi Gigaba released to Parliament the amount owed by departments. Traditionally the smallest contributor to the debt, they now owe a significant R50m.
This is decidedly up on last year. In July, national and provincial departments owed a combined R26m to Eskom, according to figures provided to Parliament by then minister Barbara Hogan.
Combined provincial and national debt is believed to be about R100m.
Clive Keegan, the Local Government Research Centre director, said Eskom was not being paid by various municipalities because “those to whom they are supplying the power are not paying them”.
This included businesses, households and some departments.
It was compounded by municipalities that had “hugely ineffective” rates and service fee collection and billing systems.
“Even those ratepayers who want to pay are unable to do so,” said Keegan, a former Cape Town mayor, who noted that there was a culture of non-payment to municipalities.
Yesterday Eskom played down the implications of the debt monster it faced. The sharply rising debt quantum has been offset by a stellar growth in revenue from R54 billion in 2009 to R71bn in 2010, a consequence of price rises and increased power uptake by paying consumers.
Thus the proportion of the bad debt went down in percentage terms.
Chief executive Brian Dames yesterday played up the apparent health of the figures.
“Between March and September last year, the debt to revenue ratio actually dropped from 0.95 percent to 0.87 percent (of revenue),” he said.
Putting a lid on concerns that the bad debt would cause the parastatal to battle to raise much-needed capital internationally, Dames said it was Eskom’s target to keep bad debt below 1 percent of revenue. The entity had not only achieved that but it had succeeded in lowering the debt ratio.
Dames said these figures were shown to investors. “When talking to investors they are given that (positive) trend,” he said, noting that the bad debt was tracked continuously.
He said bad debt was determined by the terms of payment. Default could be registered after just 16 days for a key big consumer, 20 days for other large customers and 40 days for smaller businesses.
Eskom’s bacon was saved as it benefited from increased tariffs, as well as a rise in consumption by big consumers who were paying their bills.
Yesterday DA spokesman on public enterprises Pieter van Dalen questioned the apparently low debt ratios. “Last year Eskom wrote off about R2bn owed by Soweto. I just can’t see how these figures can be so favourable when it is clear that municipal, provincial and national debt levels are soaring.”
Among the bigger debts owed by departments were Water and Environmental Affairs at R21m and Public Works at R11.8m.
The SABC owes over R1m and Airports Company South Africa owes R3.1m out of the total of R7.6m owed by public enterprises.
Hilary Joffe, the Eskom spokeswoman, said two defaulting municipalities in the Free State and one in the Eastern Cape had been given notice of power cuts but had then been put to terms. Ngwathe (Parys) and Mafube (Frankfort), two Free State municipalities that were among big defaulters six months ago, now owed R42m.
Credit to: Donwald Pressly from Business Report