SA may stop funding 27 districts not paying Eskom

‘The culture of non-payment for services consumed must stop’ – Treasury.

South Africa is considering withholding funds from 27 local municipalities who are failing to pay their electricity bills to state-owned utility Eskom.

In March, the central government stopped disbursements to 59 municipalities who weren’t honouring their debts, forcing the districts to agree to payment plans with Eskom and other creditors. Of these, 27 have since failed to settle, the National Treasury said on Wednesday in an e-mailed response to questions.

“The culture of non-payment for services consumed by all levels of government, business and communities must stop,” the treasury said.

Eskom, which provides 95% of South Africa’s electricity, was owed R4.4 billion ($324 million) by municipalities by August. The company is struggling to meet demand after years of underinvestment and delays in completing new plants, resulting in power cuts almost one day in every two in the first half of 2015. The country has worked out a R23 billion bailout for the utility.

The National Treasury is meeting with the non-paying municipalities to “assist them and to address institutional weaknesses in the system,” it said. The South African Local Government Association and the Department of Cooperative Governance are also involved in the talks, it said.

©2015 Bloomberg News

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