Cape Town - Late payments by municipalities to Eskom and the Auditor-General of South Africa, as well as the related issues of unfunded and under-funded budgets at municipalities were on Tuesday flagged as issues of concern in the legislature.
Provincial Treasury officials appeared before the standing committee on local government to explain their role in addressing the situation in four municipalities out of the 30 in the province in arrears with Eskom.
The four municipalities were named as Matzikama, Cederberg, Kannaland and Beaufort West, and the Provincial Treasury said part of its strategy was to facilitate discussions between Eskom and the municipalities to negotiate credible and affordable payment arrangements.
It said open, honest and frank conversations allowed all parties involved to understand that municipal sustainability was in the best interests of all concerned.
Kannaland and Beaufort West municipalities, as well as Laingsburg, are also in debt to the AGSA with regard to audit fees in excess of 1% as per the Public Audit Act.
Prince Albert Municipality’s debt to AGSA fell just short of the 1% excess.
The act specifies that if the audit fee exceeds 1% of the total current and capital expenditure of the auditee for the relevant financial year, the excess must be defrayed as a direct charge against the National Revenue Fund.
The officials from the Provincial Treasury told the committee that they had taken a number of steps to ensure municipalities in the province don’t drown in debt to Eskom.
They said that as of January 2023, Western Cape municipalities were responsible for only 0.5% of outstanding municipal debt older than 30 days to Eskom, despite representing 16.1% of electricity sales, at this stage.
The officials said they had numerous systems in place to ensure municipalities do not fall into arrears, including: actively monitoring the payment of creditors via in-year-monitoring processes and guidance on setting cost-reflective tariffs to safeguard payment of bulk purchases.
Other mechanisms that the department shared with the committee include support towards debtor management to ensure the timeous collection of electricity service charges and assistance to manage cash flows for Eskom payments as part of Budget Funding Plans.
Newly elected committee chairperson Isaac Sileku (DA) said: “Eskom is already falling apart, and municipal debt is a compounding factor that eventually harms residents, as Eskom demands huge tariff increases to cover the shortfall.”
Speaking after the briefing, committee member Pat Marran (ANC) said one of the highlighted areas of concern during the briefing was that of unfunded budgets for municipalities.
Marran said this was a problem because there was a possibility that the national government would consider withholding funds if municipalities did not have clear revenue collection plans. He urged Local Government MEC Anton Bredell to look into this.
Marran welcomed reports that the national government was considering making all Municipal Public Accounts Committee positions a full-time job so that the portfolio holder could focus strictly on the finances of the municipality and keeping the executive to account.