South Africa’s deputy President David Mabuza convenes Eskom political task team meeting

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South Africa’s Deputy President David Mabuza has today, 29 May 2020 convened and chaired a meeting of the Political Task Team on Eskom.

The meeting focused on the proposals dealing with the management and recovery of municipal debts to Eskom, with a specific focus on how to resolve the issue of outstanding debts to Eskom.

Rising municipal debts pose serious risks to Eskom’s long-term financial sustainability, and contribute significantly to liquidity challenges facing Eskom.

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The meeting noted that current municipal arrear debt levels remain very high, and have reached R28bn as at 31 march 2020, which is an increase of R8,2bn over the past 12 months.

The meeting agreed on urgent and drastic measures to ensure that municipal debts to Eskom are addressed. Among others, these include:

• Defaulting municipalities are supported to structure, and enter into, debt repayment arrangements with Eskom, and ensure that terms of debt repayment are honoured and adhered to.
• Strengthening the work of the newly established Multi-Disciplinary Revenue Committee led by National Treasury to ensure that all municipal debts are coordinated, tracked and resolved on an ongoing basis,
• Providing targeted technical support to municipalities to build requisite capacities and capabilities to deal with challenges relating to tariffs, billing, collections, metering and illegal connections.
• Establishing an effective institutional mechanism to resolve disputes where there are disagreements on the debt amounts owed.

The meeting also deliberated on debts owed by Organs of State to municipalities with a view of ensuring that the ability of municipalities to pay their debts is not constrained by non-payment of revenue due to them. In this regard, the meeting directed that all organs of state, including national and provincial departments must settle their arrear obligations immediately. National Treasury was tasked to communicate with all affected organs of state to ensure that debts owed to municipalities are urgently settled.

The meeting also received a progress report on energy security interventions through the procurement of additional capacity as announced by President Cyril Ramaphosa. In this regard, the meeting discussed current progress in the implementation of the emergency procurement programme that will allow Eskom to procure on a short-term basis additional capacity to meet existing gaps. The meeting welcomed the progress made in procuring of extra capacity following concurrence by the National Energy Regulator of South Africa to the Section 34 determination to procure 2000MW.

Lastly, the meeting received an update report on the Eskom build programme with regard to Medupi, Kusile and Ingula power stations. The meeting was briefed on steady improvements made in the energy availability factor as a result of new Eskom power plants. The Eskom Task Team was apprised of progress made in resolving major new plant defect challenges to ensure that the new build programme progressively contributes to additional energy availability.

The Eskom Task Team was established by President Ramaphosa to among others, to provide political leadership support to ensure that Eskom is able to meet its obligation of providing electricity and ensure that Eskom develops and implements a credible and transparent national maintenance programme to ensure that power generation plants operate at optimal levels to reduce negative impacts of electricity supply disruptions.

The Task Team was also established to oversee the speedy implementation of short-term energy generation and supply measures to address the electricity demand gap. Given the opening of the economy during risk alert 3, it has become more important to ensure that the lights to stay on for the duration.

“We have met as the Eskom Political Task Team to discuss in-depth the state of municipal debt to Eskom as well as recovery interventions of debt owed by various government departments to municipalities. The issue of non-payment cannot go on unaddressed as it impacts negatively on the long-term sustainability of Eskom, which inadvertently contributes to de-industrialisation of our economy.

“In this regard, we are pleased that there is improved coordination at government level, SALGA and Eskom on how we increase optimal performance of the utility whilst ensuring security of energy supply. There is still a long way to go in taking Eskom out of the woods, but we are making steady progress,” said Deputy President David Mabuza.

The next meeting will discuss a more permanent solution of pre-paid electricity.

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