Arrear debt owed by municipalities to Eskom has ballooned to R74.52 billion, more than doubling from R35 billion in 2021, Business Day reports.
“Of the 248 municipalities supplied by Eskom, 135 municipalities have overdue debt (including 36 that owe less than R1 million) as at 29 February. Some of these municipalities were approved for the National Treasury debt relief programme,” Eskom told the publication.
And approximately 60% (R44.7b billion) of the debt is owed by just 10 municipalities, eight of which have been approved to participate in the Treasury’s debt relief programme.
In April 2024, the National Energy Regulator of South Africa (NERSA) approved a significant electricity tariff increase of 12.74% to address the financial challenges faced by Eskom, the national power provider.
The increases are as follows:
Local authority tariff charges: 1 July 2024 – 30 June 2025: 12.72%
Eskom direct customers: 1 April 2024 – 31 March 2025:
All tariff charges except the affordability subsidy charge: 12.74%.
Homelight 20A: 12.74%.
Affordability subsidy charge: 25.24%
Eskom data shows that the City of Tshwane holds the largest arrear account of R8.6 billion at end-February 2024.
A recently published Municipal Financial Sustainability Index (MFSI), by Ratings Afrika gauged the financial sustainability of 104 largest local municipalities plus 8 metros in South Africa.
The agency provided each of the 112 municipalities a score out of 100, based on an analysis of six components:
Operating performance;
Liquidity management;
Debt governance;
Budget position;
Affordability;
Infrastructure development.
The only province to receive an average MFSI score of over 50 was the Western Cape, at 53.
The Free State and Mpumalanga are the provinces with the lowest performance, each scoring an average of 23 in 2023.
According to data from the Ministry in the Presidency for Planning, Monitoring, and Evaluation, 90% of municipalities face distress or dysfunction - 66 of them are totally dysfunctional, and 163 are currently distressed.
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