Eskom praises Newcastle Municipality for settling its debt

Eskom has praised the Newcastle Municipality for settling its outstanding debt, stating that it is a significant achievement for the power utility as it battles to receive bulk electricity payments from municipalities.

It should be noted that by December last year, municipalities owed Eskom at least R56 billion for bulk electricity supply.

Newcastillian News reported on 5 July 2023 that the Newcastle Municipality had officially cleared its historical Eskom debt after years of diligently working through the problem.

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Reflecting on Newcastle Municipality’s achievement, Eskom said, “This was no ordinary payment. It marked a significant milestone for Eskom, the Newcastle Municipality, the Department of Cooperative Governance and Traditional Affairs [CoGTA] and the KwaZulu-Natal Treasury.”

In making these payments, and finalising the R342 million overdue debt, Eskom explained that the Newcastle Municipality successfully discharged the conditions of the payment arrangements signed between the two organisations.

“Newcastle Municipality not only settled their overdue debt, but for Eskom, this marked the largest settlement of overdue municipal debt by a considerable margin,” the power utility said.

Eskom Central East Cluster General Manager, Agnes Mlambo, acknowledged the dedication and commitment of the municipality’s leadership in “resolving the various challenges of the past three years” as it worked to settle its debt.

“The municipality communicated any concerns and challenges proactively to Eskom and this in turn allowed for further discussions to keep the payment arrangements intact. Critically, the promises made were followed through with concrete actions. Without this physical discharge of the commitments made, the conditions of the payment arrangement would have lapsed, and Eskom would not have been able to fulfil its side of the equation,” Mlambo said.

Moreover, the power utility said the Newcastle Municipality serves as an example for other municipalities on how to settle their debt.

“The settlement reflects the potential for success in South Africa when different people and organisations work together towards a common goal. Critically for Eskom, it allows for the costs of electricity generation, transmission and distribution to be recovered, allowing Eskom, as one of the largest power utilities in the world, to be self sustainable,” said the power utility.

Eskom further said it looks forward to other municipalities, who are in a similar position, to take a page from the Newcastle Municipality book and similarly discharge their obligations.

“Eskom would like to place on record its gratitude to the Office of the Chief Director CoGTA KZN and her staff, the Director of Municipal Finances KZN Treasury and his staff as well as Eskom staff who worked tirelessly to ensure the success that we now celebrate,” the power utility said.

While the power utility commended the Newcastle Municipality, Newcastle Mayor Cllr Xolani Dube said, ‘’ Owing to debt accrued from the previous administration, the municipality has been facing severe financial constraints. But we understood that the impact of defaulting on our payment agreement to Eskom would have a dire effect on businesses and households who rely on the municipality for electricity supply. It is for the above reason that we honoured the commitment of paying a monthly amount of R30 million which resulted in the full settlement of this debt ahead of the deadline.”

 While the settling of Eskom’s debt brings significant relief from financial distress, Cllr Dube said the municipality’s financial challenges are not fully mitigated. However, the leadership demonstrated by the coalition government led by the IFP must be applauded for its display of good governance through this debt settlement.

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