The South Africa Local Government Association (SALGA) has resolved that the country’s municipalities embark on a rigorous debt collection and restructuring process – in an effort to prop up their coffers.
This intervention is part of wide-ranging plans announced yesterday by SALGA President Thembi Nkadimeng during the joint sitting debate on President Cyril Ramaphosa’s State of the Nation Address, delivered last Thursday.
In her address, Nkadimeng said SALGA has resolved on a two-phased approach to address the untenable Eskom and water boards debt, plaguing the local government sphere.
Municipal debt to Eskom and Water Boards and Water Trading Entity currently stands at R25 billion and R14.9 billion, respectively. Debt owed to municipalities for municipal services already delivered currently hovers around R170 billion.
She said largest component of debt relates to households, which account for close to R120 billion. While business debt constitutes about R25 billion, outstanding debtors for government are almost at R10 billion.
“All municipalities should urgently, aggressively and on an ongoing basis enforce their respective credit control management measures,” she said.
Nkadimeng said this phase should include targeting government properties and businesses through disconnection where there is sufficient merit, in line with their credit control policies.
Part of the second phase will include conducting a rigorous analysis of the gross debt and restructure debts to ascertain realistically collectable debts and those that could be considered for write-off or repeal as historical uncollectable. This phase also includes installation of pre-paid meters.
SALGA, Nkadimeng said, supports the decision to restructure Eskom, as well as the policy commitment to an independent, State-owned transmission company with power planning, procurement and contracting, and system operation functions.
This would ensure a non-discriminatory access to the grid on level playing fields by incumbent Eskom generators, as well as new generation entrants, said Nkadimeng.
“For the benefit of our municipalities, we also welcome the policy commitment to a diversified, competitive generation sector, comprising a number of Eskom generators, public-private partnerships (PPPs), municipal generators, independent power producers (IPPs) and embedded generators on customers’ premises.
“Of particular appreciation are the measures to be in place to enable municipalities to procure their own power from independent power producers,” said Nkadimeng.
This, she said, will present municipalities with the ability to negotiate cheaper bulk electricity prices and as a consequence, pass these onto consumers, who are already under tremendous taxation strain.