Eskom needs R56bn from govt this year. Soweto and municipalities now owe it R41 billion

Business Insider SA
Load shedding
  • Eskom will need an average of R1 billion per week from the government to keep afloat in its current financial year, it said on Friday.
  • After a giant write-off, Soweto now owes the utility R12.8 billion.
  • After massive growth, again, arrears debt owed by municipalities now stands at R28 billion.
  • Collecting in Soweto remains tricky, Eskom says, and municipalities keep signing agreements on how to pay off their debt, then failing to honour those deals.
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In its current financial year it will need R56 billion, an average of R1 billion per week, from the South African government in order to stay afloat, Eskom said on Friday.

"We regret the burden that this places on the fiscus, particularly in the current economic climate," the electricity company said in a presentation on its financial results for the year to the end of March.

That number would be reduced by nearly 75% if municipalities and the residents of Soweto were to pay what they owe, Eskom's books show.

In its last financial year, Eskom wrote off nearly R8 billion in overdue Soweto debt, in terms of rules which would have made that money unlawful to collect. Even so, unpaid bills from the suburb stood at R12.8 billion.

Arrears debt owed by municipalities, meanwhile, grew by some 40%, to reach R28 billion at the end of the financial year.

The combined R40.8 billion owed by those two groups is equal to about a fifth of Eskom's revenues for 2020.

A little under 21% of Soweto residents now pay their electricity bills, Eskom said, compared to 12.5% the previous year. It describes that proportion as "unacceptably low".

But the extra R327 million people in Soweto added to what they already owe was dwarfed by the R8.1 billion that South African municipalities added to their arrears debt.

Only 76% of municipalities now pay the bills Eskom sends them, down from 96% four years ago. 

Just ten municipalities are responsible for nearly R20 billion in arrears debt, Eskom said, but at the end of March it counted 45 municipalities that owe it more than R100 million each, which "demonstrates the pervasive nature of the problem". 

At that point the company had 48 payment agreements in place with municipalities – but only 20 of those were being fully honoured.

Municipalities in the Free State were responsible for 41% of the arrears by local governments. Only two municipalities in that province were keeping up their agreed debt repayments.

"We are exploring the possibility of collecting municipal customer payments directly and arranging prepayment of accounts, as well as withholding services to defaulting customers," Eskom said.

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