Several Free State municipalities hugely indebted to Eskom have hastened to apply for the National Treasury’s debt relief programme. Of the 17 indebted municipalities, 11 have already applied.
The cash-strapped ANC-led municipalities owe the national power supplier large amounts of money in overdue and current accounts. The two that are debt-free are the ANC-led Setsoto Municipality and the coalition-run Metsimaholo Municipality in Sasolburg.
Free State Premier Mxolisi Dukwana announced in his State of the Province Address (Sopa) on 29 February that 11 municipalities had been provisionally approved to participate in the debt relief programme, further encouraging other debt-ridden municipalities to secure their participation.
Those provisionally approved by the National Treasury for debt relief are the Mangaung Metro, as well as the Nala, Masilonyana, Matjhabeng, Maluti-A-Phofung, Dihlabeng, Nketoana, Ngwathe, Moqhaka, Phumelela and the Tswelopele municipalities.
The closing date for applying to the Eskom Municipal Debt Relief Support Programme was extended to 31 October, from September 30 last year.
Even though at that stage the individual debt of the Free State’s 17 defaulting municipalities were not revealed, it was stated that by May last year the municipalities had reportedly owed Eskom R18 975 589 308, combined, in overdue accounts. The three with the most debt are Ngwathe, Maluti-A-Phofung and Matjhabeng.
The MEC for Finance, Gadija Brown, announced during the presentation of the provincial adjustment budget speech in November 2023 that a substantial portion of the historic Eskom debt would be written off, subject to the municipalities’ adherence to the conditions of the debt relief programme introduced to provide support to municipalities that are unable to pay their escalating electricity bills to Eskom. These municipalities have been found to dismally fail to adhere to intergovernmental agreements with Eskom to repay the supplier for several years – hence huge debt.
The defaulting municipalities are sharply blamed for contributing to Eskom’s financial problems, which are notable with ongoing load shedding over the years.
The national government plans to implement the debt relief of R243 billion over three years.
The relief consists of two components. First, there is Eskom’s debt service requirements of R184 billion. This represents Eskom’s full debt settlement requirement in three tranches over the medium term. Second, this is a direct take-over of up to R70 billion of Eskom’s loan portfolio in 2025-’26.
