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The Standing Committee on Public Accounts (SCOPA) supports efforts by Eskom and the national government to resolve the growing municipal debt which contributes to the power utility’s weak balance sheet. Municipalities have an Eskom debt of R94 billion that is overdue. 

In the current financial year, Eskom is contending with R8.9 billion revenue that cannot be recognised in it's balance sheet because municipalities do not have the ability to raise and pay that amount of money.  This figure increased from R6.3 billion in 2023 and is expected to double by the end of 2025. 
 
The Eskom Board and management appeared before SCOPA yesterday to respond to the audit outcomes and financial performance of the 2023/24 financial year. They also outlined cost saving measures in the first six months of the 2024/25 financial year as well as future plans. 

The elements of Eskom’s municipal debt elimination proposal in the distribution agency agreement are: 
1. Eskom is prepared to freeze collection of the amount in areas if municipalities accept assistance from Eskom with engineering skills, debt collection capacity and improvement of electricity distribution infrastructure.
2. Municipalities must stay up to date on their current consumption. If they stay up to date for a year then Eskom will write off 33.3% of the historical debt. They will write off the same amount if the conditions are met in year 2 and year 3, which means all historical debt will have been written off. 
3. Eskom is recommending that municipalities move to pre-paid metres.
4. Eskom is recommending all municipal electricity revenue be ring-fenced for paying Eskom and maintaining electrical infrastructure.

Eskom will initially focus on the top 14 defaulting municipalities, representing 58% of overdue municipal debt. 

Eskom’s financial performance in the first six months of the 2024/25 financial year compared to March 2023 shows a projected profit of R10 billion for 2024/25 financial year. Cost saving measures include:
- Profit before tax improved from R2.2 billion to R23 billion.
- Operating profit increased from R20.9 billion in 2023 to R46.3 billion.
- Revenue increased by 16% from R158.6 billion to R183.7.
- Net finance costs have decreased from R19.7 billion to R17.8 billion.
- Debt securities and borrowings decreased from R412.2 billion in 2023 to R395.3 billion.
- Eskom’s earnings before interest, taxes, depreciation, and amortization increased from R37.6 to R61.7 billion.
 
SCOPA Chairperson, Mr Songezo Zibi, said: “We welcome Eskom’s efforts to improve governance, operational performance and efforts to resolve the municipal debt crisis. We also call upon the Department of Electricity and Energy, Department of Cooperative Governance and Traditional Affairs, and National Treasury to move as fast as possible to implement the plan.”

Issued by the Parliamentary Communication Services on behalf of the Chairperson of the Standing Committee on Public Accounts, Songezo Zibi