Cash-strapped consumers bear the brunt of municipalities failing to pay their huge debt to Eskom, which has applied to the National Energy Regulator of South Africa (Nersa) for a 40% electricity increase.
This is according to Werner Horn, DA chairperson in the Free State, during a protest on Monday, 25 November, in Bloemfontein against Eskom’s application for the tariff increase. The opposition party in the Free State was among the organisations that made submissions to Nersa during a public hearing on Monday.
These submissions strongly oppose Eskom’s 40% electricity tariff hike request to the regulator.
“This electricity price hike will be detrimental to the survival of lower and middle-income households struggling to make ends meet across the Free State. Businesses will suffer from the cost of higher overheads, which could have a significant impact on an already struggling economy,” said Horn.
He said Eskom’s 40% potential increase includes an application for a 36,15% tariff increase in 2025.
“This is an additional 4% make-up tariff already approved by Nersa to recover revenue losses from previous years, owing to municipalities failing to pay Eskom’s current and huge debts.”
Horn highlighted that, in addition to defaulting payments to the supplier, municipalities in the province were notorious for repeatedly breaching the Intergovernmental Relations Framework (IRF) agreements they have entered into with Eskom.
“Currently, ANC-run municipalities owe Eskom R90 billion, with very little collection and recovery being reported. Eskom must clean up its own house and root out the corruption and organised crime that has significantly contributed to the increased costs of operating the entity.
“Last year, Eskom lost R24 billion, including R5 billion in irregular spending and R6 billion in material losses – including R81 million lost to corruption,” said Horn.
This rampant non-payment by Free State municipalities has seen 11 of the 17 indebted to the power supplier enlisted in the Eskom Debt Relief programme, which the national government plans to implement over three years for the debt relief of R243 billion.
The IRF agreement is an internal remedy for government departments and municipalities.
Even though the individual debt of the 17 defaulting municipalities was not revealed, it was stated that by May last year the municipalities had reportedly owed Eskom R18 975 589 308, combined, in overdue accounts. The three with the most debt are the Ngwathe, Maluti-A-Phofung and Matjhabeng municipalities.
The Letsemeng Municipality in the Xhariep district went as far as taking its payment dispute with Eskom to the courts, namely the Free State High Court, the Supreme Court of Appeal, and the Constitutional Court in 2022. The matter ended with an unfavourable outcome with costs ordered against it.
Letsemeng’s arrears initially totalled R41,1 million and has risen to R119,7 million during a prolonged dispute of two and a half years. Its current account had risen to R5,5 million by the end of 2022.
Despite the municipality repeatedly breaching internal remedial actions, such as the IRF agreement signed with Eskom, the municipality resolved to settle their dispute in court.
