Neelam Rahim | neelam@radioislam.co.za

2-minute read
15 April 2023 | 18:31 CAT

Photo credit: My Broadband

National Treasury will demand that Eskom write off some R70 billion in outstanding municipal debt as part of the government taking over some of the utility’s debt.

If successful, the plan – set out in a circular to municipalities dated 31 March – will deal with Eskom’s outstanding municipal debtors, who collectively owe the power utility R56 billion, as per Moneyweb.

Leveraging the R254 billion debt relief to Eskom announced in February, National Treasury will require Eskom to write off one-third of the principal debt, interest and penalties of every participating municipality accumulated up to the end of February 2023 per year over three years.

Energy Expert Chris Yelland told Radio Islam International the municipal debt is rising at R10 billion annually.

He said the problem is deep-rooted, and the taxpayer will have to pick up the tab for all the municipality debt.

Despite various political, administrative and legal approaches, a sustainable solution to the municipal debt problem has yet to be found.

Meanwhile, according to Moneyweb, municipalities must apply for participation in the scheme before May every year.

If they qualify, they will immediately start enjoying the benefits. Any existing payment plan with Eskom will be suspended, and the municipality will no longer have to pay arrear debt, interest, or penalties. Eskom will further suspend any litigation against them.

Listen to the full interview on Radio Islam’s podcast.