Eskom will use a three-fold strategy to ensure all municipal current accounts were paid, arrear debt was settled and the risk of future default was managed. busrep
Eskom’s spokesperson Sikonathi Mantshantsha said the utility was focused on extensive stakeholder engagements via various intergovernmental platforms and actively partnered with its stakeholders to improve revenue collection within municipalities and offered payment arrangements to make repayments easier.
Mantshantsha said that the non-payment by municipalities placed extreme pressure on the liquidity of the utility. Eskom said that these non-payment of debts by municipalities may also lead to electricity consumers paying higher tariffs in future. “The fact that it remains an issue illustrates the deep lying financial issues at the municipal level and the lack of progress with the interventions from national and provincial governments to address the issue. When this initially became a concern, a task team was established to deal with this issue. Recommendations were made to parliament on the issue but I am unsure of the way forward and implementation of the recommendations,” said Mahabir.
“National Treasury’s state of municipal finance reports also confirm that there are many municipalities that have Unfunded budgets and are at serious financial risk. Such issues are the results of years of financial mismanagement.” “Another fundamental issue is the long term poor financial planning and the impact of electricity price increases on municipal budgets. Related to the point above, many municipal tariffs are not cost reflective i.e. the final price charged to consumers does not appropriately take into consideration the costs of providing services.
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