Eskom debt is skyrocketing

There will be very unhappy residents in Emalahleni by the end of this week.

In a desperate attempt to recover money to pay back Eskom, the Emalahleni Local Municipality will be serving more than 20 000 notices giving customers two weeks to correct their accounts.

“We have appointed the Red Ants to start with cut-offs after the two week period. If the public will cooperate and we can get 30% of the outstanding debt recovered,” said Municipal Manager, Mr Theo van Vuuren.

Van Vuuren came under attack when the Democratic Alliance asked the question why the Eskom account has gone from R185 million to R963 million during Van Vuuren’s tenure as administrator, acting municipal manager and now municipal manager.

DA councillor Lizelle Steyn lashed out and said the municipality was placed under administration because of its poor financial management and non-delivery of services.

“It is now evident that the municipality is worse off today under Van Vuuren’s leadership than it was before he was placed under administration,” Steyn said.

Steyn said in the council meeting on Thursday, October 27 both Van Vuuren and the Executive Mayor, Cllr Lindiwe Ntshalintshali failed to give clear answers as to why the Eskom account has increased by 418% between March 2013 and September 2016.

“They claimed that there was not enough revenue endorsement as the municipality currently loses at least 40% of its electricity to illegal connections,” she said.

“We are working very hard to turn the situation around after the winter month set back and a more aggressive approach to encourage all those with arrear accounts has been introduced,” Van Vuuren said pointing out to the 20 000 notices.

He said between now and the middle of November they will be engaging Eskom with options and hope to arrange the catch up plan to arrest the situation.

“I am positive that we will as before be able to keep the lights on but this time we will really be highly dependent on our community to start contributing more fully to their current accounts as well as at least part of the massive arrears. This is not a time of blame, or accusing each other, but time for all to work together to turn the situation around,” he said.

Time line

Van Vuuren has on more than one occasion convinced the electricity giant not to flick the switch in Emalahleni and has come up with several initiatives to pay the arrears on the Eskom account.

Together with his team, he has over the past four years been engaged in a constant debate and negotiations with Eskom to find solutions to the escalating debt.

Various strategies have been employed and progress to correct the billing system, reduce illegal connections, installation of protective structures and meters and improvement of the network efficiencies are being rolled out. On a monthly basis the municipality and Eskom engage in joint revenue enhancement meetings.

Since 2012 the Eskom account has been a huge headache. The disparity between electricity consumption and recovery of cost rapidly accelerated over the past four years and annually, especially during winter periods, this led to an escalation in outstanding debt to Eskom.

The man that has to keep Eskom happy said the main driving factors to this situation lies in the high level of illegal consumption of electricity, mainly from informal areas but also from many businesses’ and formalised areas, the rapid growth of the city which increased the areas which have not been formally linked to the network and or accounting system, the constant exceeding of the maximum demand limits as the inlet stations from Eskom have been over taxed with up to 20% and recently a drastic drop in payment rates from all communities that can be traced back to the closure of Highveld Steel and repercussions thereof. Where the municipality has budgeted at 85% payment rate this rate on average is below 65% for this period and the average payment for electricity of R45 million per month resulted in a deficit of between R80 and R100 million per month against the Eskom bill.
This can also be seen in the increase in the amounts owned by customers to the municipality which now increased to R2.2 billion.

Also to be taken into consideration is the fact that the cost of electricity escalated during the winter months where the peak demand tariffs and penalties resulted in bills of R140 million plus per month.
According to Van Vuuren there is a flicker of hope.

“The medium to long term prognosis to bring the cost of electricity consumption in line with payments for it by consumers are making steady positive progress. This process is driven by an aggressive formalisation process as well as house to house audit to bring everyone on the payment grid. At this stage however, given the limited resources available to roll out these initiatives, there are still an estimated 20 000 plus consumers being billed incorrectly for services and 34 000 households in informal areas not billed at all. Over the next 18 months, based on the human settlement programmes, 18 000 of them should be incorporated in the formal billing system and the 20 000 incorrectly billed households be fully captured.”

He added that with reference to the DA’s statement he sincerely hopes that they will throw in their weight behind these initiatives as community leaders in important wards to ensure that we can achieve a sustainable solution to the current problems.

Steyn got the last word in and said they called on Cllr Ntshalintshali to remove Van Vuuren and hire a municipal manager who can bring prosperity to Emalahleni.

“We will now engage with the MEC for Co-Operative Governance and Traditional Affairs, Refilwe Mtsweni calling on her to place Emalahleni municipality under administration in terms of Section 139(1)(b) of the Constitution and ensure that the new administrator is someone who is suitably qualified, competent and will bring proper service delivery to residents”

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