The Minister of Cooperative Governance and Traditional Affairs (CoGTA), Mr Des van Rooyen convened the Inter-Ministerial Task Team (IMTT) on electricity on 13 February 2018 in Cape Town.
The meeting today (13 February 2018) was convened to primarily receive and engage reports from various sectors, assess the levels of debts by municipalities to Eskom, Water Trading Entity and Water Boards and to also assess progress on the interventions to reduce these debts.
The meeting noted progress on key areas and agreed that the time frames set to address all the constitutional, systemic and structural challenges relating to electricity reticulation and distribution should be brought forward and that these challenges should be resolved as soon as possible.
The meeting noted progress with the appointment of an Advisory Panel which will work on the Constitutional matters relating to electricity reticulation and distribution and submit their recommendations to the IMTT for consideration. This Panel will soon be announced and thereafter a first meeting with the members will be held to brief them on the scope of work.
This IMTT was initially for meant to deal with matters relating to electricity, but there was an agreement that its scope of work should be expanded to include matters relating to debts owed to Water Trading Entity and Water Boards by municipalities since it seems the root causes of these debts are the same.
The Ministries of Cooperative Governance and Traditional Affairs, Public Enterprises, Water and Sanitation and National Treasury have been visiting provinces to engage municipalities in an effort to find solutions to the challenges that relates to bulk electricity and water debts. In all provinces visited thus far, plans were developed to begin addressing this challenges. The respective local councils are to confirm this plans and ensure their implementation.
The Minister of CoGTA has also visited a number of provinces engaging municipalities with more bias on those that are struggling and have challenges. Some of this challenges that includes lack of revenue base, governance issues, poor financial management and lack of leadership.
The IMTT noted that, even though a number of municipalities have signed agreements with Eskom and water boards, the challenge is that some are already defaulting on their agreed payments. The IMTT is therefore encouraging municipalities to sign affordable and sustainable agreements which are backed by thorough analysis of their financial positions. This analysis will ensure that municipalities are able to pay what they can afford and thus leading to less chances of defaulting. All agreements between municipalities should include inputs from Provincial and the National treasuries as they must assist with the numbers.
The IMTT noted the severe cash impact that non-payment of bulk electricity account by municipalities has on Eskom and Water Boards. To this effect, the IMTT urged municipalities to atleast honour the payment of the current account to ensure that debts do not escalate. It was clear from the visits undertaken thus far to provinces and meetings held various stakeholders, that the current account payment can be possible.
Payments of the current account can have much positive impact on the financial challenges of Eskom and Water Boards. An important benefit is that municipalities who adhere to the agreed payment plans will not pay interest on their debts.
The IMTT reiterated that its work cannot be seen in isolation and requires a comprehensive intervention and we call on all South Africans to work with Municipalities to improve their lives. “To this effect, we call on all users of the municipal services in South Africans to pay as it is the right thing to do. Our Municipalities will not be able to cope under such a strain caused by lack of revenue base”, concluded Minister van Rooyen.
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