Home South African ‘No write-off of consumer debt owed to municipalities’

‘No write-off of consumer debt owed to municipalities’

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A blanket approach to consumer debt write-off is not economically viable, affordable or prudent as it will not address these underlying challenges and will likely further exacerbate the consumer debt owed to Eskom and municipalities.

Finance Minister Enoch Godongwana has ruled out the possibility of the National Treasury writing off consumers’ debt owed to municipalities and Eskom. Picture: Independent Newspapers Archive

FINANCE Minister Enoch Godongwana has ruled out the possibility of the National Treasury writing off consumers’ debt owed to municipalities and Eskom, saying it was up to the power utility and councils to do so.

Godongwana made his stance known in reply to written parliamentary questions from EFF MP Eugene Mthethwa who enquired if the minister had considered writing off debt for poor people who were deeply indebted to municipalities to such an extent that some have lived for long periods without electricity because of the confiscated Eskom transformers in their areas.

Mthethwa noted that Godongwana pronounced to write off Eskom electricity bills of indebted municipalities.

Earlier this year, the government invited municipalities to apply for debt relief for arrears debt to Eskom.

The plan was to write off the debt over a three-year period provided that the municipalities comply with set conditions. These included enforcing credit control and collecting revenue to pay bulk expenses such as electricity and water and up-to-date payment of the Eskom monthly current account.

Municipalities that failed to meet the conditions were to repay the remainder of their arrears debts to Eskom, including interest and penalties.

In his reply, Godongwana said there were two main challenges in terms of arrears owed to Eskom as well as municipalities.

These were consumers who did not pay for municipal services delivered and a lack of leadership to ensure that credit control was enforced and Eskom and/or municipal revenue was collected.

“A blanket approach to consumer debt write-off is not economically viable, affordable or prudent as it will not address these underlying challenges and will likely further exacerbate the consumer debt owed to Eskom and municipalities.

“In this context, it should be noted that the write-off of consumer debt owed to municipalities and Eskom falls within the ambit of Eskom and/or the respective municipalities that are providing the consumer with electricity within the demarcation and cannot be separated from proper indigent management,” he said.

Godongwana also said the local government equitable share provided for a package of free basic services, including 50 kilowatt-hours free electricity to poorer households within the identified municipal demarcations, including Eskom supplied areas.

“National Treasury analysis indicates that many municipalities do not provide all households that qualify with this benefit and many municipalities divert the local government equitable share, the free basic services component earmarked for poorer households, to fund other municipal priorities and salaries.

“Consequently, they do not pay Eskom the free basic services electricity component.”

Both the Eskom and municipal debt relief conditions allowed the write-off of consumer debt, he said.

“But this is subject to prepaid smart metering for consumers unable to repay Eskom or the municipality coupled with restricting electricity to the national free basic services free electricity policy limit for indigent consumers.”

As for Mthethwa’s comments on confiscated transformers, Godongwana said he should refer these queries to Eskom.

Cape Times

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