Pretoria - The City of Tshwane’s financial problems have once again come under scrutiny after Eskom today called out the metro for non-payment of outstanding debt of R1.4 billion for bulk power supply.
This came in the wake of a leaked Auditor-General’s adverse audit report for the 2021/2022 financial year earlier this month.
The report, which is expected to be discussed during a council sitting today, presented a worrying picture of the city’s financial management with irregular expenditure of R10.4 billion and fruitless and wasteful expenditure understated by R1 billion.
According to the report, the City failed to properly account for assets worth more than R52 billion and more than R800 million was not properly accounted for leave payments.
Eskom expressed concern that the metro’s electricity debt “has compounded to a bulky R1.4 billion as of today January 25 2023, due to its short payment and non-payments spanning several months in the recent past”.
“The city short-paid its November 2022 bill of R660 million and also failed to pay its December 2022 account of R780 million, negatively impacting the liquidity, financial performance, and sustainability of the power utility,” the power utility said in a media statement.
The entity said it had several engagements in vain with the City with a view to encourage it to settle its November 2022 account by December 31 2022.
Eskom said it had approached the Department of Co-operative Governance and Traditional Affairs to mediate in the resolution of the metro’s poor payments that continue to spiral out of control.
It further said the Public Finance Management Act required it to recover what was owed to it.
The mediation process, according to the power utility, was in line with section 41(2) of the Intergovernmental Relations Framework Act 13 of 2005 in August 2022, after Eskom declared a dispute.
“Eskom has previously reported on Tshwane’s erratic payments on its bulk account. On January 5 2023, the power utility again made the same plea to the City to settle its long outstanding invoice of November 2022, in a meeting between the two entities, but to no avail. Eskom does not have the financial capacity to finance the City’s operations and calls on the City to do right by its residents and pay the bulk electricity account to enable Eskom to continue supplying electricity to the city,” Eskom said.
Last year mayor Randall Williams said the City’s financial problems with Eskom could be attributed to a number of factors such as the municipal salary bill that increased from R700m per month to about R1.2bn per month because of a benchmarking exercise.
He said salaries constituted 50% of the operating budget.
Another factor affecting the City’s cash flow liquidity was a problem with revenue collection during the period when the City was placed under administration.
Revenue collection also dropped during Covid-19 because many people didn’t receive their regular incomes, Williams said.
Mayoral spokesperson Sipho Stuurman confirmed that the City was in arrears with Eskom, owing the power utility R1.4 billion.
“However, we have proposed a plan to Eskom where we are making a regular payment and it is our aim to ensure that we fully service our account and that we continue to pay Eskom.
“We have repeatedly communicated our liquidity problems and have always been reaching out and engaging with Eskom and presenting them with different payment plans and they continue to reject some of these plans but we are sticking to our proposal and we are making regular payments to Eskom, “ he said.
Pretoria News