The DA in Mpumalanga has written to CoGTA MEC, Mandla Ndlovu and management of eMalahleni Local Municipality calling on them to present an action plan detailing how they are going to improve revenue generation in the municipality and subsequently repay Eskom.
The recently released Section 71 Report for eMalahleni paints a picture of a municipality in extreme financial distress as they currently owe their creditors R7 billion as at the end of June 2022. Of the amount mentioned above, Eskom is owed R6.5 billion.
The Section 71 Report also revealed that as a result of inaccurate revenue generation strategies, together with poor debt collection practices, the municipality was owed R6.4 billion for services provided. The majority of this amount (R6.1 billion) was owed over 90 days.
The ever-increasing debt to Eskom in the municipality is in turn affecting service delivery and the financial position of the municipality as the liquidity ratio decreased from R0.56:1 to R0.53:1 between the third and fourth quarter. This means that for every R1 of creditors owed, the municipality has only R0.53 to cover it.
It is extremely concerning to note that six years prior, this very same municipality owed Eskom only R1 billion and was owed just over R2 billion for services which was provided. This steady growth in the Eskom debt is scary taking into consideration that the municipality has been placed under a financial rescue plan since 2018.
Given the above inadequacies over the past years, the DA has written to the MEC Ndlovu requesting a meeting in which he and together with the leadership of eMalahleni present possible solutions to the ever increasing Eskom debt in the municipality.
The DA is also concerned with the state of financial affairs at Mpumalanga’s Capital, the City of Mbombela.
According to the fourth quarter budget and financial performance results for the 2021/2022 financial year, the City of Mbombela owes over R1.3 billion to creditors with Eskom being the municipality’s biggest creditor with R 849 million.
Their Eskom debt has grown from R 512 million in 2020 to R 849 by the close of the 2022 financial period.
Other creditors owed by the City of Mbombela include the Department of Water Affairs, Trade Creditors, Department of Safety and Community Liaison and others.
Despite the city’s creditors reduction plan which is aimed at minimising the amounts owed to creditors and improving their financial sustainability, it has become evident that the municipality cannot afford to service the current consumption which monthly average at R90 million.
The DA will continue to fight for the review of revenue and cost curtailment strategies and make sure that an urgent contingency plan is implemented to properly deal with the municipality’s creditors including Eskom.