Public Works resolving Eskom municipal debt

The Department of Public Works and Infrastructure (DPWI) has begun reconciling and verifying debt owed to Eskom by the country’s 257 municipalities.

Appearing before Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday, Public Works and Infrastructure Minister Patricia de Lille unveiled the department’s plans to address the climbing Eskom debt.

As of 30 June 2019, municipalities reported that the overall government debt owed by the DPWI was just over R3 billion. However, as of 4 February 2020, 63%, or R1.97 billion, of the reported R3 billion debt had been resolved.

“At that stage (30 June 2019), 135 of the 257 municipalities reported their debt owed to DPWI. The remaining 122 municipalities did not report, as per the statutory requirements,” said the Minister.

The department, she said, is in the process of verifying and reconciling the debt owed for all 257 municipalities.

“The government debt campaign, which was started by DPWI on 1 August 2019, focused on the verification and reconciliation of the outstanding debt. The project is monitored weekly by DPWI regional offices, while progress update meetings are also held monthly with National Treasury,” De Lille told Scopa.

Municipalities were informed of the government debt project through letters in October 2019, whereby their cooperation to jointly resolve the reported debt was sought.

“Ongoing working sessions are being held with various municipalities, which include account by account reconciliations, verification of property ownership, securing sign-off on agreement between parties, setting timelines for delivery of invoices based on sign-off and payment/account credits,” De Lille said.

Following verification and engagements with the relevant municipalities, there was a difference of more than R1.7 billion from the R1.97 billion. De Lille said this means that once all the accounts of these municipalities were verified, the actual amount owed was R186 million, as opposed to the initially reported amount of R1.97 billion.

“This represents a significant difference in the actual amount owed to municipalities than what was initially reported by municipalities," said De Lille.

While 63% of the debt has been resolved, the DPWI updated Scopa on the progress with engagements with more municipalities. DPWI is conducting ongoing engagements with 52 municipalities to verify R655 million, which was reported as owed to municipalities in the 30 June 2019 Section 71 reports, the Minister said.

Getting municipalities to comply

Meanwhile, as the campaign continues, 142 municipalities still have to be engaged to verify an amount of R388 million, as reported in the Section 71 reports on 30 June 2019.

During the verification and reconciliation process, it had been found that municipalities were unable to substantiate the reported figures stated in their Section 71 reports.

De Lille said the department is resolute in its commitment to settle all verified debts within 30 days of receipt of the statements.

“Despite the debt owed to the DPWI, the department continues to pay municipalities and Eskom on time. The DPWI has taken a decision to devolve the settling of municipal services to the various user departments, with effect from 1 April 2020.

“This has been communicated with all user departments, Eskom and municipalities. DPWI also met with Eskom on 5 December 2019 to address issues of common interest,” she said.

The Minister said no outstanding debt was highlighted during the meeting and no outstanding debt was raised in the follow up meeting held on 21 January 2020.

“Eskom in fact commended the DPWI on its timeous payment and confirmed the positive working relationship between its officials and DPWI officials. 

“DPWI is committed to settling all verified invoices within 30 days. Outstanding invoices are monitored on a weekly basis. All unpaid invoices in DPWI’s possession, as at 31 January 2020, are current, except for three offices with an arrears of R4.9 million,” she said