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The debt metros owe the power utility rose from R74.4 billion at end-March 2024 to R94.8bn at end-December 2024 The dire financial position municipalities across South Africa find themselves in and the billions they collectively owe Eskom came into sharp focus once more during the Budget Speech delivered by Minister of Finance Enoch Godongwana this week. The Minister pointed out that the decline in municipal services is evident across cities, towns and rural villages, highlighting the systemic challenges faced by the metros. “As outlined by the President in his State of the Nation Address, phase 2 of Operation Vulindlela, the institutional structure of local government will be reviewed through the updating of the white paper of local government. “In line with the constitutional principle of funds follow function, the review of the local government fiscal framework will examine how to appropriately finance local government, relative to their functions and their form.” Targets set for municipalities Reforms to the revenue generating services of local government – namely water and sanitation, electricity and refuse removal – are underway, said Godongwana. He confirmed that six of the eight metropolitan municipalities have met the minimum requirements to participate in the financial performance incentive grant, the Urban Development Financing Grant. “Further allocations in the programme are dependent on municipalities meeting specific targets related set out in their performance improvement action plans. The challenges facing local government go beyond funding – weak political and administrative management has resulted in persistent failure “For 2025/26, this includes critical institutional, governance and management changes to create an enabling environment for long term investment in infrastructure. “By ring-fencing the revenues from these services, and running operating surpluses, these business units can generate funds for infrastructure improvements to deliver quality and reliable services.” The country’s Minister of Electricity and Energy Dr Kgosientsho Ramokgopa has been criss-crossing the country since last year, engaging with municipalities on their debt owed to Eskom. |
