'R13.5bn municipal debt can cripple Eskom'

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THE financial sustainability of Eskom would remain difficult for as long the power utility was unable to secure its debts, the board’s chairman Jabu Mabuza said yesterday. Briefing the standing committee on public accounts (Scopa), Mabuza said municipal debt remained a pressing challenge for Eskom, which faces serious financial challenges. “The amount owed by municipalities continues to grow with notable increases from R9.5billion to R13.5bn, a 42% escalation between 2017 and 2018. This is of serious concern as it challenges Eskom's sustainability." Mabuza appeared before Scopa with his colleagues from SA Local Government Association (Salga), National Treasury and Co-operative Governance. The committee wanted answers on what was being done to solve the growing debt owed by municipalities - Free State municipalities owed R6.5bn and Mpumalanga R3.2bn alone. Mabuza said investors were concerned that the increasing municipal debt would make it difficult for Eskom to service its own debt.

Questions were now asked if Eskom cannot collect its debt, how would it pay its creditors, Mabuza said. “This reduces appetite for Eskom bonds".

The debt stood at R13.8bn with interest at the end of April.

“The collection of the municipal debt requires an urgent shift in approach,” Mabuza said.

Bold decisions were needed and relevant stakeholders should do the right thing to address the non-payment of Eskom debt.

“We need to face the harsh realit. Eskom's financial sustainability will remain difficult for as long we are unable to secure our debt."

Ayanda Noah, Eskom group executive for customer services, said: “In one year we had an increase of R4.1bn. In March the debt increased by anoher R320m."