1. Portfolio Committee on Co-operative Governance
21 February 2017

2. Eskom has been progressing well with implementing the PAJA Process
Eskom initiated the PAJA process in November 2016
Our total overdue debt including interest was R10.2bn
The debt has come down to R9.5bn – interest charge is approx. R2.7bn
Eskom currently has 54 (from Top 66 Defaulters) Payment Arrangements finalized supported by Council resolutions
eMalahleni and Msukaligwa have defaulted on their payment agreement and are not honouring their current account. They are therefore subject to daily scheduled interruptions.
The solution is to move Municipalities from post payment to prepaid meters.
4 pilots in Free State and Eastern Cape to move to prepaid meters
Eskom has agreed to resolve the Top 5 issues raised by the Municipalities
Days
>15
>30
>60
>90
Total Overdue
R’m
552
932
715
7 328
9 527

3. Eskom is currently addressing the Top 5 issues raised by the Municipalities1
Eskom is proposing the Rationalisation of Municipal Tariffs to reduce tariff options from 11 to 3
Eskom will decrease the Interest Rate charged on overdue balances from Prime plus 5% to Prime plus 2.5%
Eskom will change the payment period on Municipal Bulk accounts from 15 Days to 30 Days
Eskom will change its payment allocation policy to allocate payments to capital first and then interest
Allow municipalities to pay connections charges over a 20 year period at relevant interest rate in stead of Cash up Front 2 3
Provincial contributions 4 5
Note: Above proposals are subject to Eskom board approval and are forward looking

4. The total overdue debt has been growing over the past 3 years and only started decreasing after implementation of the PAJA process
Total overdue debt as on 31 January 2017 (Rm)
Debt overview
10 223
Total municipal debt overdue at the end of January equaled R9.527bn
Top 10 overdue municipalities are overdue by R6.071bn
Top 20 overdue municipalities are overdue by R7.393bn
There are 66 municipalities that are overdue by more than R10M
104 municipalities have overdue debt in excess of R500k
Three Provinces contributing R7.40bn FS MP NW
The PAJA process has helped Eskom in recovering debt of R1.3 bn and subsequently resulted in a R700mn debt decrease from Nov 2016 to Jan 2016
Steady decrease in debt since the implementation of PAJA
9 674
9 604
9 527
9 180
7 342
6 012
5 589
6 005
5 299
4 953
4 520
4 004
3 288
2 369
2 593
R4.313bn
R2.251bn
R0.838bn
2 369
1 202
1 157
1 258
Dec-12Dec-12
Mar-13Mar-13
Jun-13Jun-13
Sep-13Sep-13
Dec-13Dec-13
Mar-14Mar-14
Jun-14Jun-14
Sep-14Sep-14
Dec-14Dec-14
Mar-15Mar-15
Jun-15Jun-15
Sep-15Sep-15
Dec-15Dec-15
Mar-16Mar-16
Jun-16Jun-16
Sep-16Sep-16
Oct-16Oct-16
Nov-16Nov-16
Dec-16Dec-16
Jan-17Jan-17

5. The Top 20 defaulting municipalities have a combined overdue debt of R7.393bn
Top 20 Defaulting Municipalities as on 31 January 2017
Municipal Entity
Overdue balance (Rm)
MALUTI A PHOFUNG 
1 679
MATJHABENG 
1 206
EMALAHLENI 
938
NGWATHE 
644
THABA CHWEU 
365
GOVAN MBEKI
352
LEKWA 
277
NALEDI 
218
DITSOBOTLA 
197
THABAZIMBI 
196
NALA 
161
RANDFONTEIN 
149
MSUKALIGWA 
139
CITY OF MATLOSANA 
137
MOGALE CITY 
128
WALTER SISULU 
127
MOQHAKA
125
DIHLABENG 
122
NKETOANA 
117
MUSINA 
116

6. Provincial Age Analysis
Municipal debt age analysis by province as on 31 January 2017 (Rm)
Total overdue
Province
>15 days
>30 days
>60 days
>90 days
Free State
109 74 86 31
163 37 24 14 15
552 97
151 67
126
266 8
200 3 14
932
189
180
120
136 16 30 32 10 2
715
3 945
1 847
579
308 66
414
116 50 4
7 328
4 340
2 251
853
601
511
489
371 76 34
9 527
Mpumalanga
North west
Northern cape
KEY MESSAGES:
The problem of Munic/Re-distributor debt is mainly in the Free State Province.
However we do see an increasing trend in all Provinces especially Eastern Cape, Gauteng and KZN.
We also notice an increase in the number of Municipalities defaulting.
Gauteng
Limpopo
Eastern cape
Kwazulu natal
Western cape
Total

7. 2019/05/11
Average debtors days are worsening and overdue debt in excess of 54%... Soweto and Munics biggest contributors
Electricity debtors age analysis, R million
Total
Within due date
< 60 days overdue
> 60 days overdue
Large power users, excluding municipalities
 7 174
  6 540
101
533
Large power users, municipalities (including interest)  
 5 698
1 484
8 043
Small power users
  2 881
1 615
153
1 112
Soweto (excluding interest)
  5 291 63 69
5 159
International customers 8  6 1
Total at 31 January 2017  
13 922
 1 809
 14 848
% of total
46% 6%
48%
Jan 2017
Jan 2016
Average debtors days (all categories incl. SADC)
Average debtors days (excluding Soweto, SADC and municipalities) 66 21 55

8. Soweto remains the Eskom supplied area with the largest outstanding debt
Small Power Users Debt per province (Rm)1
(Soweto shown separately)
Debt per province (Soweto shown seperately)
Eskom debt control measures
Eskom normal debt control measures include:
Issuing of notices
Disconnection
Debt collectors
Smart and prepaid meters
Eskom’s debt collection efforts have been focused on Soweto, the area with the largest debt by installing smart and prepaid meters
Eskom’s year to date Smart meter results:
10 071 meters installed
meters converted to prepaid   
Soweto
12 081
Gauteng(excl Sow)
North West
Limpopo
Kwazulu Natal
Mpumalanga
Eastern Cape
Western Cape
Free State
Northern Cape
Total
13 231
1.Values include interest 8

9. Conclusions
Eskom Appreciates the support from the ministers of DPE, CoGTA, NT to address the situation and commit to support efforts to improve the situation
Eskom’s Sustainability is essential for the economy of South Africa
The escalating trend in municipal debt seen over the past 3 years is not sustainable
Eskom is monitoring the adherence to payment arrangements and will implement PAJA if and when required
Provincial contributions