State power utility Eskom has written off R3.6 billion of interest on Soweto’s outstanding debt to it despite projecting a full-year loss of R20 billion.
The debt write-off is revealed in Eskom’s interim results for the six months ending 30 September presented by the utility’s top officials on Thursday.
Soweto’s debt now stands at R16.1 billion after the write-off. The township has a payment level of just 16%.
Municipal debt rises to R25.1 billion
Overall, municipalities across the country, excluding metros, have a payment level of 78% on amounts billed.
Municipalities also owe Eskom a total of R25.1 billion including interest, an increase of R5.2 billion since March 2019.
Although Eskom made a profit of R1.39 billion in the first half of its financial year, it has projected a R20 billion full-year loss.
Chairman and acting CEO Jabu Mabuza cited a number of reasons for the projected loss, including lower sales usually experienced in summer, unplanned breakdowns, and increased employee benefits in the second half of the year.
R150 flat rate proposed
Eskom is unable to stay afloat without billions of rand in government bailouts. Municipal debt is among the biggest revenue constraints it faces.
President Cyril Ramaphosa and Finance Minister Tito Mboweni have repeatedly urged municipalities, and especially Soweto residents, to pay for services.
Recently, an African National Congress (ANC) councillor in Soweto proposed a R150 electricity flat rate for residents of the township.
Mpho Sesedinyane told Fin24 that the flat rate could help foster a culture of payment among Sowetans to reduce their Eskom debt.
However, Eskom spokesperson Dikatso Mothae told IOL earlier in November that it is the National Energy Regulator of South Africa (NERSA), not Eskom, that has the power to regulate electricity tariffs.
He added that Eskom is therefore unable to “negotiate” separate tariffs for Soweto and that a flat rate “could lead to wasteful usage of electricity.”