The Sol Plaatje Municipality’s failure to adequately comply with Eskom’s Municipal Debt Relief Programme is placing the future of the municipality in jeopardy.
This came to light during the tabling of the fourth quarter Service Delivery and Budget Implementation Plan (SDBIP) report, says Chris Whittaker, DA-councillor at the municipality, in a statement.
The municipality finds itself in breach of the agreement for only paying partial amounts for July and August.
To salvage its agreement with Eskom, the municipality must now make payments of more than R134 million, Whittaker states.
According to the agreement, if a municipality fails to comply during the duration of the debt relief programme, the benefits of the relief will immediately cease and the municipality must immediately start repaying its Eskom arrears, interest, and penalties.
The National Treasury may also add additional penalties, including instituting criminal proceedings and initiating a takeover of a defaulting municipality’s electricity business.
This would nullify revenue collection generated by electricity sales, plunging the already impoverished municipality into an even worse financial crisis.
At present, it is stated that the municipality must draw on investments and redirect grant funding to pay salaries, institute a soft lock on the filling of vacancies, and remove employees’ option to sell their annual leave.
As of 30 September, the Sol Plaatje Municipality owed Eskom more than R1 billion for bulk electricity.
This amount represents a fifth of the total of more than R5 billion owed by Northern Cape municipalities as at June 2024.
‘Municipality remains compliant’
In reaction to the statement, the municipality confirmed that it remains compliant in its adherence to the debt repayment conditions set out by Eskom and the National Treasury in their debt relief programme.
To date, the municipality has for the past ten months paid more than R1 billion in repayments towards Eskom since the inception of the programme, Thabo Mothibi, municipal spokesperson, states.
“The municipality acted proactively in having approached Eskom and the National Treasury when we anticipated a repayment shortfall due to the municipality not charging high season and winter tariffs.
“Plans have already been set in place for the municipality to meet its debt obligation; current account and the shortfall.
“This is through an extension of end December 2024 for the municipality to be eligible for the first one third write-off – R240 million – by Eskom.
“As part of our debt recovery plans, we are engaging all debtors – household debt R2,229 billion, business R678 million, and government R871 million.
“We will provide details of the debt recovery measures soon,” Mothibi states.
Mothibi says the municipality extends its gratitude to all rate payers who are responsibly and dutifully pay for municipal services.
He urges those in arrears to help attain financial stability, often critical in the provision of essential services, infrastructure development and maintenance, enhancing environmental sustainability and other benefits.
According to Mothibi, the municipality is not utilising grant allocations for operational costs and salaries, despite cash flow challenges.
The additional allocations received from the national Department of Cooperative Governance, Human Settlements, and Traditional Affairs, were conditionally approved for strengthening capacity within the Project Management Unit, he says.
