Home South African R78 billion municipal debt threatens Eskom’s future – Ramokgopa

R78 billion municipal debt threatens Eskom’s future – Ramokgopa

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The R78 billion debt owed to Eskom by municipalities requires urgent attention to safeguard the power utility’s ability to fulfil its mandate, according to the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa.

The Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa. File picture: GCIS

THE R78 billion debt owed to Eskom by municipalities requires urgent attention to safeguard the power utility’s ability to fulfil its mandate, according to the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa.

During a media briefing on Monday, Ramokgopa highlighted the critical financial strain on Eskom due to unpaid municipal debts.

Ramokgopa highlighted the critical issue of municipalities collectively owing Eskom R78 billion and he noted that a significant portion of this debt is deemed irrecoverable.

“There’s no possibility under the sun that we are going to collect that R78 billion. It’s important that we resolve this picture,” said Ramokgopa at the briefing held in Pretoria.

He pointed out that this financial burden poses challenges for Eskom, which requires these funds for reinvesting in its infrastructure.

“Municipalities have to pay that money … but on an objective ground, they simply don’t have the means to be able to pay.”

Ramokgopa warned that the escalating debt poses a severe threat to Eskom’s future.

He emphasised the severity of the issue: if left unresolved, Eskom’s projected debt by 2050 could reach a staggering R3.1 trillion, leading to the collapse of the power utility and compromised generation capacity.

“This is the most urgent task that is confronting us. It is municipality-related but we can’t fold our arms, we need to help them from a technical point of view,” said Ramokgopa.

He stressed that the ongoing non-payment situation is impacting Eskom’s capacity to address distribution infrastructure requirements, resulting in the adoption of load reduction measures. Load reduction is implemented in areas where demand exceeds the infrastructure’s capacity.

Ramokgopa said that in addressing this challenge, it is necessary to safeguard Eskom’s viability as a going concern, enable municipalities to collect revenue, and also consider the interests of users.

“Because when that distribution infrastructure fails that is providing electricity to 50 houses, there’ll be 10 to 20 houses that have been paying diligently but they are collateral damage. The biggest victims of all of that is the end consumer and, by definition, the South African economy,” he said.

The minister said that the department, in collaboration with municipal leaders, will tackle the issue of electricity affordability and access. A crucial aspect of this effort involves reviewing electricity tariff models to improve affordability and broaden access.

“Everyone must have access to electricity and once they have access … make sure that they can afford it. That’s something that is going to receive our attention.

Ramokgopa described the distribution challenge as an ‘albatross around our necks’. “It’s on a mode of self-destruction and the casualties are the poor. They are the ones that are subjected to conditions of load reduction in the main and even those who are diligent payers are subjected to load reduction.

“This can’t continue any further. It’s important that we arrest it so that we are able to ensure that the country is able to achieve its developmental objectives,” he said.

Source: SAnews.gov.za

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