By OBAKENG MAJE
28 February 2025 – The Standing Committee on Public Accounts (SCOPA) said it supports efforts by Eskom and the national government to resolve the growing municipal debt, which contributes to the power utility’s weak balance sheet. The committee said municipalities have an Eskom debt of R94 billion that is overdue.
The Chairperson of the SCOPA, Songezo Zibi said in the current financial year, Eskom is contending with R8.9 billion revenue that cannot be recognised in its balance sheet because municipalities do not have the ability to raise and pay that amount of money. Zibi said this figure increased from R6.3 billion in 2023, and is expected to double by the end of 2025.
“The Eskom Board and management appeared before SCOPA yesterday to respond to the audit outcomes and financial performance of the 2023/24 financial year. They also outlined cost saving measures in the first six months of the 2024/25 financial year as well as future plans.
“The elements of Eskom’s municipal debt elimination proposal in the distribution agency agreement are that Eskom is prepared to freeze collection of the amount in areas if municipalities accept assistance from Eskom with engineering skills, debt collection capacity and improvement of electricity distribution infrastructure.
“This includes that municipalities must stay up to date on their current consumption. If they stay up to date for a year then Eskom will write off 33.3% of the historical debt. They will write off the same amount if the conditions are met in year 2 and year 3, which means all historical debt will have been written off,” he said.
Zibi further said Eskom is recommending that municipalities move to pre-paid metres. He added that Eskom is recommending all municipal electricity revenue be ring-fenced for paying Eskom and maintaining electrical infrastructure.
“Eskom will initially focus on the top 14 defaulting municipalities, representing 58% of overdue municipal debt. Eskom’s financial performance in the first six months of the 2024/25 financial year compared to March 2023, shows a projected profit of R10 billion for 2024/25 financial year.
“Cost saving measures include profit before tax improved from R2.2 billion to R23 billion. Operating profit increased from R20.9 billion in 2023 to R46.3 billion. Revenue increased by 16% from R158.6 billion to R183.7,” said Zibi.
He said Eskom’s net finance costs have decreased from R19.7 billion to R17.8 billion. Zibi said this includes debt securities and borrowings decreased from R412.2 billion in 2023 to R395.3 billion.
“Eskom’s earnings before interest, taxes, depreciation, and amortization increased from R37.6 to R61.7 billion. We welcome Eskom’s efforts to improve governance, operational performance and efforts to resolve the municipal debt crisis.
“We also call upon the Department of Electricity and Energy, Department of Cooperative Governance and Traditional Affairs, and National Treasury to move as fast as possible to implement the plan,” said Zibi.
The Guardian 