The cash-strapped Theewaterskloof Municipality (TWK) could have its electricity supply cut after Eskom issued a notice of breach over a R25 million debt.
The only provincial municipality that is not part of the National Debt Relief Programme, TWK was identified as one of five Western Cape municipalities owing Eskom nearly R303m.
TWK serves towns such as Grabouw, Botrivier, Caledon, Greyton, Genadendal and Riviersonderend.
Electricity and Energy Minister Kgosientsho Ramokgopa announced earlier this week that the growing national municipal debt owed to Eskom, at the end of September 2024, stood at R90 billion.
There are four municipalities in the Western Cape that are part of the National Treasury Debt Relief Programme, according to finance ministry spokesperson Tsakane Khambane.
“They have been compliant in terms of paying their current accounts. There is one new defaulting municipality that is not part of the National Debt Relief Programme.”
While TWK currently owes R25m, other municipalities which currently account for the most significant amounts owed to Eskom for more than 30 days are Matzikama (R114.94m), Beaufort West (R76.76m), Kannaland (R44.51m) and Cederberg (R41.77m).
Finance MEC Deidré Baartman said: “Where Western Cape municipalities fail to meet their obligations to their creditors (including Eskom), the Province will act to ensure this is addressed. In the case of Theewaterskloof, the municipality’s failure to pay Eskom was one of the reasons for the Provincial Executive taking the decision on 6 November 2024 to formally intervene in the municipality in terms of section 139(5) of the Constitution.
“The other four municipalities with arrear debts have been approved for the Municipal Debt Relief Programme and will have their Eskom arrears written off if they adhere to the conditions of the programme over the next three years.
All four have been assisted to comply through the first 12-month cycle of the programme,” said Baartman.
She said TWK is not eligible for the debt relief programme.
After the municipality ran into arrears with Eskom this year, Baartman said she wrote to the National Treasury’s Municipal Financial Recovery Service requesting them to urgently prepare a Financial Recovery Plan for the municipality.
“This is because only debts prior to March 2023 are eligible for the programme and the municipality only ran into arrears in 2024. Our main objective as the Provincial Government is to ensure the uninterrupted continuation of service delivery to the residents of TWK, while also working towards returning the municipality’s finances to a viable position,” said Baartman.
While enquiries to TWK and Matzikama municipalities were not answered by deadline, Beaufort West mayor, Sias Reynolds, said the “historical debt” was inherited when he came into office four months ago.
“However, we have gone into an agreement with Eskom and so far it has been confirmed that R25m of that debt has already been written off. I can confirm that if we remain compliant with the conditions of the debt relief programme, the debt will be written off over the next three years. Currently we have no service delivery challenges and we are busy with upgrades and infrastructure. Procurement from Eskom is quite expensive at the moment,” said Reynolds.
In a statement, Eskom said it was forced to borrow additional money at premiums to fund operational costs when entities fail to pay timeously or at all.
“Operational costs should be funded by revenue generated from electricity sales and not by borrowings. Borrowing money to fund operational cash shortfalls caused by the failure of municipalities (to) pay Eskom for bulk electricity increases the costs of providing electricity exponentially. Revenue can only be increased by collecting electricity debts and/or increasing electricity tariffs,” the statement read.
Meanwhile, the GOOD Party was optimistic to bring stability to the TWK municipality after councillor Weldon Wells was elected as speaker and GOOD Party councillor Cynthia Clayton was elected deputy mayor.
GOOD secretary-general, Brett Herron, said: “Under this coalition, residents can look forward to improved service delivery and can be assured that the municipality will avoid fruitless and wasteful expenditure, and appropriately allocate funds.”
Cape Times