Latest news with #R94.6
IOL News
2 days ago
- Business
- IOL News
Most municipalities flouting Eskom debt relief terms, warns utility
Embattled power utility Eskom has revealed that 87% of municipalities approved for National Treasury's municipal debt relief program are failing to meet the conditions required for debt write-offs Image: Timothy Barnard /Independent Newspapers Embattled power utility Eskom has revealed that 87% of municipalities approved for National Treasury's municipal debt relief program are failing to meet the conditions required for debt write-offs, with only 10 out of 71 municipalities remaining compliant. The municipal debt relief program was introduced by National Treasury in 2023 to help municipalities reduce the large debts they owe Eskom. It offers debt write-offs if municipalities pay their current bills consistently and meet certain conditions. Despite measures like reducing interest and payment plans, Eskom says municipal debt has kept growing and now stands at about R94.6 billion and warned that ongoing non-compliance poses a significant risk to its liquidity and overall operations. The state-owned power utility made these disclosures while briefing Parliament's Standing Committee on Appropriations on its finances on Tuesday. "So this covers the national debt relief program. So just in summary, 71 municipalities, were approved. And right now, we are only sitting with 10 compliant, municipalities,". Rajen Naidoo, Eskom's General Manager for Finance said. "The sad situation that we find ourselves in is that even municipalities that were approved did not even honour their current bill, some of them from month one of the program. So it's it it's only these 10, municipalities if they are compliant, in terms of how the program works,". Eskom CFO Calib Cassim emphasised that the purpose of the Eskom Debt Relief Amendment Bill was to place power utility on a sustainable financial footing, reducing the need for future bailouts from the National Treasury. Committee Chairperson Mmusi Maimane stressed that Eskom plays an important role and that its money problems and the growing municipal debt are key issues for the committee when deciding on funding.
IOL News
2 days ago
- Business
- IOL News
Most municipalities flouting Eskom debt relief terms, warns utility
Embattled power utility Eskom has revealed that 87% of municipalities approved for National Treasury's municipal debt relief program are failing to meet the conditions required for debt write-offs Image: Timothy Barnard /Independent Newspapers Embattled power utility Eskom has revealed that 87% of municipalities approved for National Treasury's municipal debt relief program are failing to meet the conditions required for debt write-offs, with only 10 out of 71 municipalities remaining compliant. The municipal debt relief program was introduced by National Treasury in 2023 to help municipalities reduce the large debts they owe Eskom. It offers debt write-offs if municipalities pay their current bills consistently and meet certain conditions. Despite measures like reducing interest and payment plans, Eskom says municipal debt has kept growing and now stands at about R94.6 billion and warned that ongoing non-compliance poses a significant risk to its liquidity and overall operations. The state-owned power utility made these disclosures while briefing Parliament's Standing Committee on Appropriations on its finances on Tuesday. "So this covers the national debt relief program. So just in summary, 71 municipalities, were approved. And right now, we are only sitting with 10 compliant, municipalities,". Rajen Naidoo, Eskom's General Manager for Finance said. "The sad situation that we find ourselves in is that even municipalities that were approved did not even honour their current bill, some of them from month one of the program. So it's it it's only these 10, municipalities if they are compliant, in terms of how the program works,". Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Eskom CFO Calib Cassim emphasised that the purpose of the Eskom Debt Relief Amendment Bill was to place power utility on a sustainable financial footing, reducing the need for future bailouts from the National Treasury. Committee Chairperson Mmusi Maimane stressed that Eskom plays an important role and that its money problems and the growing municipal debt are key issues for the committee when deciding on funding.
The Citizen
3 days ago
- Business
- The Citizen
‘Sad situation': Eskom warns growing municipal debt seriously risks its sustainability
Municipal debt currently stands at R94.6 billion. Eskom has warned Parliament that growing municipal debt continues to pose a serious risk to the entity's long-term sustainability. Officials from the power utility appeared before the Standing Committee on Appropriations on Tuesday to brief MPs on the Eskom Debt Relief Amendment Bill. The bill, introduced in 2023, provides R254 billion to support Eskom's debt servicing obligations over a three-year period. One of the key conditions attached to the relief is that Eskom is not permitted to take on additional borrowing. Eskom strategic goals During the committee meeting, Eskom's Chief Financial Officer (CFO) Calib Cassim outlined several of the utility's strategic priorities, including efforts to recover and maintain a 70% Energy Availability Factor (EAF) in the long term, in order to meet South Africa's electricity needs. 'We know currently it's sitting around 57% and we really need to increase that over the remainder of the year to get this average of 66%,' Cassim said. He also highlighted the need for innovative strategies to tackle municipal arrear debt and reduce energy losses. 'One of our challenges is that how do we deal with the issue around municipalities, including metros, from a finance perspective; the importance of collecting what Eskom does supply in terms of the product that contributes towards our financial sustainability and liquidity,' he explained. ALSO READ: Eskom ready to start borrowing again Cassim added that Eskom is also focused on cost optimisation, revenue enhancement, leadership stability, and employee development. The entity's revenue rose by 16% to R264.60 billion in the third quarter of the 2024/2025 financial year. This was largely due to a 12.74% electricity tariff increase approved by the National Energy Regulator of South Africa (Nersa). Eskom also reported 'significant savings' of R16.3 billion in diesel costs. Regarding the debt relief, Cassim noted that Eskom had received R8 billion of the allocated R64 billion in the 2024/2025 financial year. 'The remaining R56 billion was drawn down by the end of March 2025,' he said. Debt securities and borrowings have since decreased to R409 billion. Eskom's municipal debt remains a serious concern While the debt relief programme has improved Eskom's cash flow, Cassim stressed that municipal debt continues to pose a substantial challenge. The debt, the Eskom CFO said, has been increasing despite interventions by the National Treasury. 'We need to arrest these arrears because if we don't do that it's going to neutral the benefit we do anticipate to receive from the overall debt relief.' In the current financial year, Eskom is set to receive R40 billion in debt relief. Rajen Naidoo, Eskom's General Manager for Finance in the distribution division, reported that municipal debt currently stands at R94.6 billion. READ MORE: R100 billion debt: only 10 municipalities honouring their accounts He attributed the persistent non-payment issue to deep-rooted structural and systemic problems within municipalities. 'Municipal debt is a key risk to Eskom business and our liquidity. 'As you know that distribution collects the money but then pays that onto transmission and generation, so the problem is not just a distribution problem but an Eskom problem on the whole,' Naidoo told the committee. He explained that many municipalities are unable to pay current bills or reduce existing debt. 'The municipalities are also plagued with high energy losses in the sense that energy is either being stolen through illegal connections, meter tampering or inaccurate billing.' Watch the meeting below: Naidoo added that a decline in electricity demand was further reducing revenue, while weak financial management practices continue to exacerbate the situation. Of the 71 municipalities enrolled in the Eskom debt relief programme, 62 have been unable to meet the necessary conditions to qualify for debt write-offs. At least R55 billion in debt could have been written off had these municipalities complied. 'We have seen a rapid growth and much faster growth in terms of municipalities defaulting.' Among the top 10 non-compliant municipalities are Mbombela (Mpumalanga), Maluti A Phofung (Free State), Govan Mbeki (Eastern Cape), Emfuleni (Gauteng), and Msunduzi (KwaZulu-Natal). Collectively, they account for R50 billion of the municipal debt. 'The sad situation we find ourselves in is that even municipalities that were approved did not even honour their current bill, some of them from month one of the programme.' Metros contributing to rising Eskom's municipal debt From March 2023 to April this year, municipal debt increased by R15 billion. Metropolitan municipalities are also showing a debt rising trend at R11 billion. The City of Tshwane and City of Johannesburg accounted for R10 billion of the total. 'Initially, we did not have an issues with metros in terms of payment. Yes, there was some debt outstanding, but they would generally pay us late and would catch up. 'But from March 2023, you can see that the debt has grown from R1.7 billion to R11.1 billion,' Naidoo explained. He said Tshwane has a five-year payment plan with Eskom. A four-year similar deal was signed with Coty of Joburg recently. NOW READ: How Eskom and National Treasury saved taxpayers more than R20bn
