Cape Town – The National Treasury has formulated a plan to assist municipalities in sorting out their collective debt of R56 billion owed to Eskom. However, the plan comes with some strings attached.
The Citizen reports that Treasury has asked Eskom to write off one-third of the principal debt, interest and penalties of each involved municipality accumulated up to the end of February 2023 per year, over a three-year period.
Treasury is doing this while leveraging the R254 billion debt relief given to Eskom in February this year.
The report further reveals that one of the plan’s conditions will see municipalities having to apply for participation in the scheme before May every year.
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Conditions include regular payment of the current Eskom bill, the adoption of a realistic and funded budget, disconnection of defaulting consumers’ water and electricity supply, and a collection rate of at least 80%.
However, if a municipality fails to meet these conditions, they lose its benefits, and the Eskom collection policy once more takes effect.
According to My Broadband, if a municipality were not to meet the conditions, the Treasury could take over its electricity affairs or have the National Energy Regulator of South Africa (Nersa) suspend the municipality’s electricity distribution licence and place it in the care of another entity.
On the other hand, every year the municipality meets the criteria, Eskom will scrap a third of its debt.
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Compiled by Junaid Benjamin
