In July 2023, Eskom praised the Newcastle Municipality for successfully clearing its substantial debt. However, recent developments have raised concerns about the Municipality’s financial health, with Eskom’s September 2023 statement revealing an outstanding amount of R96,593,441.53.
Bringing this to light, Newcastillian News was supplied with Eskom’s statement to the Newcastle Municipality. Dated September 2023, the statement highlighted that the Newcastle Municipality owed the power utility the aforementioned R96 593 441,53.
As many Newcastle residents will remember, the Newcastle Municipality made national headlines after Eskom threatened to impose major power interruptions in Newcastle due to its outstanding debt.
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As a result, the Newcastle Municipality managed to secure a high court interdict against the power utility, resulting in a payment plan being agreed upon and implemented.
Furthermore, in July 2023, Newcastillian News reported how Eskom applauded the Newcastle Municipality for finalising its overdue debt of R342 million.
At the time, Eskom said, “Newcastle Municipality not only settled their overdue debt, but for Eskom, this marked the largest settlement of overdue municipal debt by a considerable margin.”
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Now, with the Municipality seeing its debt to the power utility rising to nearly R100 million, what is the cause and where to from here?
In an interview with Newcastillian News, Newcastle Municipality’s Deputy Mayor Cllr Musa Thwala said the matter was currently being addressed.
“Eskom is supplying Newcastle with 125 MegaWatts of electricity, and we only use between 98 to 100 MW. This sees us being billed for the extra 25MW and of course there is loadshedding which sees us really not requiring the extra electricity. I have suggested that Eskom keeps the extra 25MW which will see the Newcastle Municipality save money which can rather be used for service delivery,” said Cllr Thwala.
With the source of the issue being pointed out, Cllr Thwala noted the Municipality was looking into the new debt and how to address it before the matter spiralled out of control as it did in 2019.
However, while the Newcastle Municipality formalises the necessary steps, Cllr Thwala highlighted that the Newcastle Municipality was looking at steps to see Madadeni residents start paying their electricity bills to the Municipality and not to Eskom. He explained that this was to ensure the necessary rates, taxes, and utility bills were being paid.
Moreover, a member of Newcastle Municipality’s EXCO, Faizel Cassim explained that when the IFP led coalition took over in 2021, they inherited a huge debt from the previous administration, which compromised the arrears for Eskom, uThukela Water and a loan that attracted interest from the bank.
“This automatically put the finances for service delivery in jeopardy. Through cuts in the budgets over time, the municipality made history by being one of few municipalities to be able to pay off the arrears owed to Eskom. The municipality through the offices of the MM is still busy negotiating with Eskom with regards to the reduction of their availability to the municipality. For some reason, the previous management requested for a supply that exceeds Newcastle’s requirements and this comes with a huge availability charge. I have faith that our Mayor will be successful in this matter and will save money, which can be put towards service delivery,” said Cllr Cassim.
Additionally, Newcastle Municipality’s MPCA Chairperson, Bebsie Cronje said, “The Newcastle Municipality happily announced the eradication of the Eskom debt. However, within a very short space of time this debt has rapidly escalated to the amount of more than R96 mil at the end of September 2023. This means that the Newcastle Municipality is not servicing this debt anymore and the debt will incline. This is extremely concerning to the Democratic Alliance in Newcastle.”
It should be noted that the Newcastle Municipality also owes uThukela Water R225 710 616.8 as per the water utility’s statement at the end of September 2023.
“The debt to uThukela is historic. It was over R225mil in September 2023. There is movement in the reduction of this debt. These two debts combined are massive and is slowing down service delivery of the municipality in Newcastle. It is for this reason that the municipality cannot keep up with ensuring that road infrastructure, sewer infrastructure and all infrastructure in Newcastle is not properly maintained,” said Cllr Cronje.
She further explained that there is a multi-party co-governance agreement in Newcastle, where different people play different oversight roles. “We call upon the IFP led co-governance agreement of this municipality to ensure that systems are put in place to urgently address these debts. We request an urgent meeting with all concerned parties which forms part of the co-governance agreement to brief us about what is going on.”
However, Cllr Cassim provided clarity into the uThukela Water debt, highlighting that the Newcastle Municipality is constructing a plan to pay it off.
“The interest on the bank loan is also very high and is eating a huge chunk of funds that could have been used for service delivery. This has been expressed in the road shows by our honourable mayor. Newcastle residents who are not paying their bills also contribute towards poor service delivery. The MM has been tasked to find a resolution to our low collection rate, so that service delivery is improved. In a nutshell, the financial issues of the municipality will not be resolved overnight, but the administration under the MM and the IFP led coalition will work tirelessly towards resolving these issues.”
With this in mind, what are your thoughts on all of this? Be sure to let us know in the comment section below.
2 Responses
Very concerned about the municipality debt
The Municipality says loadshedding means less power used, if I understand the article , but their reply to our high electricity bills is that loadshedding does not decrease consumption