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SA finance chief bemoans ‘madness’ of Eskom debt

Mboweni says Eskom must collect the R17bn owed to it by municipalities to become financially sustainable.

South Africa’s embattled state power-utility must prioritise collecting the money it is owed by municipalities as a first step toward becoming financially sustainable, finance minister Tito Mboweni said.

Eskom has reported that municipalities owed it R17 billion ($1.18 billion) in arrears for power purchases by the end of September, a 25% increase from six months earlier. The National Treasury allocated Eskom R69 billion over the next three years in the February budget to help it stay afloat.

Mboweni described as “madness” that the government gives municipalities taxpayer money through grants, and then has to assist the power utility because some of those councils don’t pay it for electricity.

“It is not rocket science and it is quite simple,” Mboweni said in an interview in Cape Town on Monday. The arrears “must be collected,” he said.

Eskom hasn’t been selling enough power to cover its operating costs and interest payments. It’s been forced to implement rotating blackouts over the past few years to prevent a collapse of the national grid as its fleet of ageing and poorly maintained plants struggled to keep pace with demand. President Cyril Ramaphosa, who secured a five-year term when the ruling African National Congress won May 8 elections, announced plans earlier this year to split the company into three units to make it easier to manage.

Operational fix

The company’s debt has increased to almost R500 billion, according to data compiled by Bloomberg from public records, including bonds and issued loans.

Mboweni said he has no knowledge of a proposal to set up a special-purpose vehicle that would take over a large part of Eskom’s debt and raise concessional financing on the back of accelerated climate-change commitments. Johannesburg’s Business Day newspaper reported earlier Monday that the option was being considered as part of the plans to restructure the utility.

Read: SA reportedly considers special purpose vehicle for Eskom

“I have not received any information about that,” Mboweni said. “The first issue that has to be sorted out with Eskom is operational. It’s not about its finances.”

Mboweni is likely to hold on to his job for at least another year when Ramaphosa names his new cabinet next week, according to two people familiar with the selection process, who asked to remain anonymous because they aren’t authorised to comment.

Read: Tito Mboweni poised to retain post

© 2019 Bloomberg L.P
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Correction – It is the ANC that owes the billions to Eskom, and Eskom is the ANC. The ANC came to power on the promise of free electricity. Now, after ANC policies have driven all SOE’s and 80% of municipalities to bankruptcy, they all of a sudden want the people to pay. The state does not have any recourse. They can claim the assets of those who are in arrears, but those assets belong to the bank already. Most debtors do not have any property, they have “no skin in the game”. Why would they pay if they can steal with impunity? The theft of electricity is allowed by the ANC as part of their vote-buying process. In effect, the ANC bribed the voters with their own money, because they are expected to pay for the electricity now.

You see, it goes all the way back to the constitution. We are confronted by the fallacy of human rights without responsibilities. When you multiply promised human rights with zero accountability, you get zero actual human rights. The ANC government is a farce built on a fallacy.

So true. Our domestic, who lives in Dobsonville, pays precisely R100 p.m. on an account that is now well over R 48 000 and she is not worried at all. She has never had her electricity disconnected and Dobsonville seems to have less load shedding than Roodepoort …

And this is not going to change going forward, the ANC wouldn’t dare.

Good luck with collecting from the municipalities ( other than the DA ones who have already coughed up!). the money is loooong gone!

Tito lives in a fools paradise. Eskom’s pricing has very likely passed the point where the more it puts up prices, the less it will collect.

Electricity is simply unaffordable to millions of South Africans, so it is stolen by the masses. Government goes along with this, because these are it’s voters.

So municipalities under recover from consumers and can’t pay Eskom; and no amount of cajoling is going to fix that.

Meantime, the main reason why Eskom’s pricing is so high is to cover costs of maladministration and corruption – something that nersa should never have allowed in the first place, and something which consumers should not have to pay for anyway.

So at the end of the day, all fingers point back to Eskom which is run by the ANC. So Tito should really blame himself.

Blaming yourself is not part of his culture. The principle of ‘Ubuntu’ is understood by Western culture to mean ‘caring for each other/sharing in order to assist’ because that fits our notions. In his culture it actually means ‘everyone is accountable together, as a whole and no-one is to blame individually’. Therefor we shall always disagree/ misunderstand each other/ clash/ not be able to fully integrate/be separated by our notions.

Tito,
Firstly You and Treasury must identify all the Municipalities in who have not payed which is public knowledge.

Treasury must then start reducing the amount of the budget allocation to default Municipalities and Treasury then directs some of the money to Eskom until the debt is paid.

Eskom has enough on its plate to be chasing this.

How many corrupt Municipal people are in jail?

It can be fixed over time.

Wally Stowe.

I am beginning to lose respect for Tito. Just how naive can you be? How on earth can he expect bankrupt municipalities to raise funds to pay off Eskom when prescription means that all debt over two years is lost?

Tito what mechanism are you going to use to collect the debt? Handing it over to unscrupulous debt collectors is not going to work … people in certain areas are so accustomed to free electricity that they are not going to roll over and pay all of a sudden.

Perhaps the use of prepaid meters may help if the rates are affordable, say at cost. But don’t bet the house on it with the ability to with the ease with which illegal connections are possible in those affected areas.

Next you will be insisting that Sanral start collecting all the arrears E-Tolls. Fat chance of getting that right. What you must do is to budget for the shortfall of R69 Billion in the budget … take it from the overpaid fat cats in Eskom and the rest of Government employees!!

Eskom owes 500 Billion. Municipalities owe 17 Billion to Eskom.
17 Bil is a drop in the bucket compared to 500 Bil owed by Eskom.
Municipalities are not the reason why Eskom have a problem.

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