The Mbombela Local Municipality is facing a mounting financial crisis, with year-to-date figures for June 2025 showing a R877m shortfall in operating revenue.

The municipality collected R4.28b against a budget of R5.16b, highlighting chronic overestimation of income.

A major point of concern is a R356m Eskom debt write-off listed as “other revenue.”

The write-off, part of the national debt-relief programme, has not yet been confirmed by Eskom or the National Treasury, raising questions about the municipality’s reliance on unverified funds.

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Service charge collections across key utilities are underperforming.

Electricity revenue fell 9% and water 21%, mainly due to illegal connections and aging infrastructure.

Waste water and waste management revenues dropped 27% and 13%. Property rates were also 12% below target, as new developments are yet to be added to the valuation roll.

Meanwhile, operational spending exceeded the budget by R320m.

Fruitless expenditure, largely unpaid Eskom interest, accounted for R108m, while depreciation and rising insurance and service costs added pressure.

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Spending on contracted services and inventory was lower than budgeted due to cost-containment measures and reduced maintenance activity, particularly in rate-paying areas.

Capital spending reached R586m, 79% of the adjusted R747m budget, but delays and incomplete projects left R160m unspent, mostly in technical and community services. Net cash from operations is R684m, with closing cash at R221m, leaving liquidity fragile.

Mbombela owes R2.59b to creditors, including R1.67b to Eskom, while debtors total R1.38b – most over 90 days old. Officials warn that if debt-relief conditions are not met, liabilities could exceed R3.2b.

VF Plus municipal councillor Christo Peyper has vowed to demand answers from the municipality.

Key questions include why the unconfirmed Eskom write-off was used to inflate revenue, what tangible steps are being taken to fix water infrastructure and curb illegal connections, and who is being held accountable for overspending and fruitless Eskom-related interest payments.

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Financial analysts say Mbombela’s recovery hinges on credible budgeting, stronger revenue collection, and stricter control over expenditure.