South African government introduces package that writes off historic municipal debt to Eskom

  • The South African government has introduced a debt relief package that writes off historic municipal debt to Eskom to help free up revenue at municipalities to provide reliable basic services.

Municipalities will be required to meet strict requirements in the form of 33 conditions to qualify.

“These conditions include maintaining a minimum average revenue collection targets for electricity and water services; ring fencing all electricity, water and sanitation revenue collected; and paying the Eskom current account first and the bulk water current account second before any other monthly payments,” Minister in the Presidency, Khumbudzo Ntshavheni said on Thursday.

Read more of South Africa’s unsustainable and growing R56 billion muniscipal debt owed to Eskom HERE

She was addressing a media briefing on the outcomes of Wednesday’s Cabinet meeting.

National Treasury said the Eskom debt relief will improve Eskom’s sustainability – facilitates the condition that Eskom write-off the municipal debt, interest and penalties under strict conditions.

The package intends to:

  • Improve Eskom’s balance sheet.
  • Relief the financial crisis – Eskom municipal defaulters.
  • Bring about critical changes in the energy sector.
  • Incentivise a change in behaviour in the municipal space.
  • Restore basic minimum financial management best practices.
  • Deal with the consumer culture to not pay for services consumed (LG and Eskom).

Author: Bryan Groenendaal


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