Eskom writes off Soweto’s R5.3bn debt

Utility proposing transfer of customers in its licensed areas of supply to City Power

DEBT owed by Soweto residents to Eskom has decreased to R7.5 billion in 2021 from R12.8bn last year, but this was because the power utility wrote off R5.3bn.

Eskom indicated that the total invoiced Soweto debt had decreased to R7.5bn, including interest, by the end of March this year, down from R12.8bn last year.

However, of the debt owed by residents of the country’s biggest township, only R536 million was deemed collectable, and the sprawling township has a payment level of only 20.6%.

“The reduction in Soweto debt is mainly due to the write-off of prescribed debt of R5.3bn and write-back of non-compliant in duplum (double the amount) interest of R3.3bn,” Eskom states in its 2020/21 annual report released this week.

Eskom has promised to deliver on its municipal debt management strategy and pursue active partnering agreements to slow the growth in arrears debt, and to leverage its relationship with the government and the power utility’s political task team to achieve sustainable solutions to the recovery of municipal and Soweto arrears debt.

The top 20 defaulting municipalities account for 81% of total arrears in municipal debt of R35.3bn, with more than 38% owed by municipalities in the Free State.

By the end of March, there were 47 municipalities with total arrears debt of more than R100m each.

According to Eskom, this has grown considerably during recent years and demonstrates the pervasive nature of the problem.

Eskom stated that although arrears in municipal debt has grown rapidly over the past few years, Soweto’s debt has increased at a slower rate.

Because Soweto power consumers comprised tens of thousands of residential customers, it was a much greater challenge to manage and collect individual outstanding amounts compared to the few hundred municipal customers.

The Eskom board has granted its management approval to engage with the City of Joburg for the proposed transfer of customers in Eskom’s licensed areas of supply, including Soweto and Sandton, to City Power.

“Negotiations have commenced; the Soweto debt balance, regulatory processes, as well as social, human resource and financial implications, are being considered,” Eskom said.

Soweto residents’ troubles with Eskom have led to several protests over the years and have resulted in them demanding to pay a R100 monthly fee for electricity.

Meanwhile, energy company Electricidade de Moçambique (EDM) is Eskom’s only international arrears debtor, with R449m outstanding and 96% of this is overdue.

Eskom and EDM have agreed that only the disputed amount of R350m would be subject of mediation currently under way, and the remaining debt will be settled in terms of a debt repayment plan concluded in April last year.