Miners’ association opposes Treasury’s suggestion to write off municipal debt to the utility
The association representing mining companies that contribute more than 7.5% to SA’s GDP and employ nearly 500,000 people has taken a dim view of the government’s decision to finance another expensive bailout of Eskom.
Hitting back at the concerns expressed by MPs during public hearings on the 2023 Eskom Debt Relief Bill, held by the select committee on appropriation, that the privatisation of Eskom would see a rise in electricity prices and derail rollout of electricity to those who still lacked access, Motsa said the government could allay these fears by looking at what happened in the telecommunications industry.
“We can learn from the telecommunications industry, which has been predominantly privatised. There were also fears before the linearisation of this sector that cellphone charges will be too high and not affordable for many South Africans, but this has not been the case.” He said the Minerals Council was strongly opposed to a Treasury suggestion to write off the debt owed to Eskom by municipalities. Such a move presented “a moral hazard which will most likely worsen the problem of nonpayment in the future”.
When finance minister Enoch Godongwana announced the Eskom debt-relief package during the national budget speech in parliament in February, he said that undertaking a debt relief of the magnitude the Treasury was suggesting without addressing the risk posed by municipal debt would be counterproductive. For this reason, the Treasury was considering a conditional debt write-off.
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