Power utility Eskom says a majority of the country’s municipalities owe it a debt totalling about R13 billion. The power utility has told the National Assembly’s Standing Committee on Public Accounts that this is an increase of over 40% on last year’s municipal debt.
Eskom Board Chairman Jabulane Mabuza says in some cases, Eskom has been forced to take municipalities to court to recover money owed to it.
“The issue of outstanding municipalities debt remains one of the main challenges for Eskom. More so as the organization faces serious financial challenges. The amount owed by municipalities continues to grow with a notable increase from R9.5 billion to R13.5 billion, a forty two percent escalation between 2017 and 2018. This is of serious concern as it challenges the sustainability of Eskom. Investors are concerned that the increasing municipality bad debt will make it difficult for Eskom to service its own debt. They raise questions such as if Eskom cannot collect its debt-how is it going to get its money back.”
Last week, Eskom suspended three power station managers in relation to the current coal supply shortage. Spokesperson Khulu Phasiwe said managers of Kendal, Matla and Hendrina power stations were placed on suspension, while chief procurement officer Jay Pillay was served with a precautionary notice.
Six of the 15 power stations are running low on coal but the utility says the recovery plan is working well to ensure the lights stay on.
Last month, Eskom said that it would issue new coal contracts to ensure adequate supply for its power stations ahead of winter. The utility says it has put a number of measures in place to deal with coal shortages at seven of its power stations.
The recovery plan is to secure additional coal from other suppliers and divert excess coal to stations that are running low.