Why Newcastle Municipality Owes Eskom R662 Million Again After Settling Debt in 2023

As the financially distressed Newcastle Municipality grapples with severe fiscal strain, its Municipal Manager and Mayor were pressed to account for the authority’s deepening financial crisis during an engagement with the National Portfolio Committee on Cooperative Governance and Traditional Affairs, alongside the Standing Committee on Public Accounts.

At the centre of the discussion was a question—one that residents have been asking for years—why does Newcastle’s Eskom debt continue to spiral?

The question is particularly pressing given that the municipality now owes the state-owned electricity utility R662 million. This marks a steep escalation from the previous debt of just over R200 million, which was fully settled in July 2023.

Less than three years later, municipal leadership found itself having to explain why the Eskom account had once again escalated so dramatically. Adding to the strain, Newcastle Municipality also owes uThukela Water R314 million for bulk water supply.

Addressing the rising liabilities to both Eskom and uThukela Water, Municipal Manager Zamani Mcineka attributed much of the increase to what he described as a persistent culture of non-payment.

According to Mcineka, a segment of residents has simply refused to pay for municipal services. In response, he said, the municipality has begun instituting legal action against defaulters. He further revealed that an internal assessment uncovered approximately 15,000 billed consumers who were deceased, with the municipality now attempting to trace their heirs in an effort to recover the outstanding amounts.

At the same time, the municipality has introduced additional debt-recovery measures, including the appointment of external service providers tasked specifically with collecting consumer debt to help address the growing obligations to Eskom and uThukela Water.

However, as scrutiny intensified, it became evident that unpaid accounts are not confined to residents and businesses.

Despite repeated public assertions to the contrary, it was confirmed that municipal employees and various government departments collectively owe Newcastle Municipality R20.9 million.

This prompted a direct question from a parliamentary committee member, who asked:

“With almost R1.2 million owed to the Newcastle Municipality employees, do you have a payment plan in place and are they paying interest?”

Further pressure followed as the committee sought clarity on whether the municipality had taken concrete steps to recover the estimated R19.7 million owed by government departments, and whether any incentives or discounts had been offered to encourage settlement.

In response, Mcineka acknowledged that municipal officials — including councillors — were among those with significant arrears.

He maintained, however, that the affected individuals were making payments under structured arrangements.

Expanding on the matter, he explained:

“When they were applying to the Municipality, they gave us specific addresses. But in those addresses, we experienced this challenge where there were no payments for services. When we traced these individuals, we found that some of them are denying that they live there, or have since moved to other residences, but because they have not changed their details in our records, we have to hold them liable.”

He added that the municipality has begun enforcing deductions directly from the salaries of implicated officials and councillors to ensure compliance.

Mcineka also indicated that payment arrangements have reportedly been concluded with the relevant government departments, as the municipality attempts to stabilise its finances amid mounting oversight and growing public frustration.

Against this backdrop, governance and accountability concerns have also surfaced at a political level.

Dr Imran Keeka, Member of the Provincial Legislature and Democratic Alliance (DA) Amajuba Constituency Head, said the DA has noted with serious concern the allegations raised against Newcastle Municipality, despite the DA being part of the governing coalition.

He stated:

“These allegations point to systemic governance failures that, if left unresolved, directly undermine service delivery and negatively affect residents who depend on reliable access to water, electricity, housing, and municipal infrastructure. These matters were raised before the National Portfolio Committee on Cooperative Governance and Traditional Affairs (CoGTA) during its week-long oversight visit to KwaZulu-Natal last week.”

Ultimately, the scrutiny facing Newcastle Municipality indicates that explanations alone will no longer suffice. With financial pressures intensifying and public confidence strained, attention has shifted towards demonstrable corrective action.

Restoring institutional discipline, enforcing accountability, and implementing credible financial controls will be essential if the municipality is to halt further decline and begin rebuilding trust.

As oversight continues and political scrutiny deepens, the municipality’s progress will remain under close watch from residents, creditors, and lawmakers alike. The task ahead extends beyond balancing the books; it requires a renewed commitment to governance reform and responsible administration.

Whether Newcastle Municipality can regain stability will be judged not by assurances, but by tangible action.

What are your thoughts on this? Be sure to leave your thoughts below.

Do not forget to read, High Court Orders Removal of Amajuba Mayor and Deputy Mayor Amid Financial Irregularitie, if you missed it.

FAQs: