NEWS & ANALYSIS

Eskom: FState municipalities must pay back over R5bn – Mmusi Maimane

DA leader says expected debt-to-GDP ratio of over 60% will confirm rating agency's fears

ANC-run Free State municipalities must pay back over R5 billion debt to Eskom

21 February 2019

Democrats,

Bagaetsho dumelang,

We are here outside the Free State Premier’s Office to pass on a clear message to the ANC provincial government: we, the people will not continue to pay for the sins of the ANC. Government must take immediate action against municipalities in the province which have failed to pay more than R5 billion in bills owed to Eskom.

Democrats, this province is the biggest defaulter when it comes to paying its Eskom bills. Maluti A Phofung, Matjhabeng and Ngwathe owe Eskom R2.809 and R1.815 billion and R940 million respectively – the 1st, 2nd and 4th most indebted ANC municipalities to Eskom in South Africa as at November last year.

Finance Minister, Tito Mboweni’s, Budget Speech confirmed yesterday that almost five times this amount owing will be allocated each year in bailouts, totalling R69 billion in the Medium Term. South Africa cannot continue to pay for the sins of the ANC in government.

This is not a drill, it’s a risk to the very sovereignty of our nation. The ANC’s corruption, inefficiency, mismanagement and mountainous debt has brought South Africa and its economy to its knees on the edge of a fiscal cliff.

This crisis is so severe that sovereign credit ratings agencies like Moody’s have warned the ANC government that if State Owned Entities (SOEs) like Eskom raise government’s debt burden, South Africa’s credit rating will be downgraded which could lead to another dip into recession that would plunge the country’s economy deeper into darkness. Mboweni’s announcement yesterday that our debt-to-GDP ratio is expected to soar to over 60% for the first time since we became a democracy will likely have confirmed their fears.

There is hope for the worst indebted ANC municipalities like Maluti A Phofung, Matjhabeng and Ngwathe in the Free State. But three practical solutions must immediately be implemented to climb through the pile of debt they owe. We call on the Premier to immediately:

- Institute a name and shame campaign for non-payers of electricity by releasing the names of the main offenders that are non-paying to these municipalities’ websites and local papers to make sure the community knows who is skipping on payment. This would be similar to the water saving name and shame campaign in the DA-led City of Cape Town;

- Install smart meters that will allow the timeous collection of payments from municipalities to Eskom;

- Take urgent action with consequence management for managers in these municipalities and others that are not paying and do not meet payment targets for outstanding payments to Eskom.

Where the DA governs, we are miles ahead of the rest of South Africa’s renewable energy readiness. More than 8 in 10 municipalities in the Western Cape already have laws in place to allow for independent solar energy generation and most of them are ready to sell clean energy back into the grid. This is what City led economic development looks like and why we continue to take the ANC government to Court over the right to diversify energy and buy directly from Independent Power Producers (IPPs).

The DA has a clear plan to reform the energy sector and to stabilise electricity supply. We would immediately:

- Privatise the generation entities of Eskom, allowing a diverse range of energy to enter the grid, increasing competition and lowering costs;

- Instruct Eskom to immediately freeze the build on the last two outstanding units at Kusile, and instead look to bring on more IPPs to provide power. Eskom’s debt is spiralling due to cost overruns on the two big coal builds, while the units are not running at full capacity due to design and build flaws.

- Reaffirm Eskom’s engineering and maintenance employees as an “essential service” that cannot enter into strike action;

- Install major smart meters for municipalities to force municipalities to collect revenue timeously; and

- Allow well-functioning metros to source energy directly from independent energy suppliers.

The worst offending ANC municipalities from the Free State to Emalahleni, Govan Mbeki, Lekwa and Thaba Chweu in Mpumalanga, Emfuleni in Gauteng and Ditsobotla and Naledi in the North West owe the dying Eskom more than R10 billion in total debt during level 4 loadshedding weeks ahead of an ANC created bankruptcy of Eskom that it is incapable of managing.

This is a national emergency. Citizens have a civic duty to cut the ANC’s power on 8 May 2019 and vote for change!

Issued by Mmusi Maimane, Leader of the Democratic Alliance, 21 February 2019