South Africa

Eskom cancels 5.3 billion rand on Soweto’s 13 billion rand electricity debt

Through Loyiso Sidimba 17 months ago

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Debt of Soweto residents to Eskom fell to 7.5 billion rand in 2021 from 12.8 billion rand last year, but that’s because the power company wrote off 5.3 billion rand. .

Eskom said Soweto’s total billed debt had fallen to R7.5 billion, including interest, by the end of March this year, from R12.8 billion last year.

However, of the debt owed by residents of the country’s largest township, only Rand 536 million has been deemed collectable, and the sprawling township has a payment level of just 20.6 percent.

“Soweto’s debt reduction is mainly due to the cancellation of the prescribed debt of Rand 5.3 billion and the assumption of non-conforming debts. in duplum (double the amount) interest of 3.3 billion rand, ”Eskom says in its 2020/21 annual report released this week.

Eskom has pledged to implement its municipal debt management strategy and pursue active partnership arrangements to slow the growth of debt arrears, and to build on its relationship with the government and the political task force of the electricity company to find sustainable solutions to the recovery of municipalities and Soweto. overdue debt.

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

At the end of March, 47 municipalities each had a total backlog of over R100 million.

According to Eskom, this has increased dramatically in recent years and demonstrates the pervasive nature of the problem.

Eskom said that although past due municipal debt has grown rapidly in recent years, Soweto’s debt has grown at a slower pace.

Since Soweto’s electricity consumers included tens of thousands of residential customers, managing and collecting individual outstanding amounts was a far greater challenge than the few hundred municipal customers.

Eskom’s board of directors has authorized management to engage with the City of Johannesburg for the proposed transfer of customers from Eskom’s authorized supply areas, including Soweto and Sandton, to City Power.

“The negotiations have started; Soweto’s debt balance, regulatory processes, as well as social, human and financial implications are under review, ”Eskom said.

The Soweto residents’ problems with Eskom have led to several protests over the years and have led them to demand to pay a monthly fee of R100 for electricity.

Meanwhile, energy company Electricidade de Moçambique (EDM) is Eskom’s sole international arrears debtor, with R449 million in arrears and 96% in arrears.

Eskom and EDM have agreed that only the disputed amount of Rand 350 million will be the subject of currently pending mediation, and the outstanding debt will be settled according to a debt repayment plan concluded in April of the year. last.

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Eskom cancels 5.3 billion rand on Soweto’s 13 billion rand electricity debt

SourceEskom cancels 5.3 billion rand on Soweto’s 13 billion rand electricity debt

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