Eskom’s head of distribution Monde Bala reports that Eskom and the National Treasury are hoping that the number of municipalities participating in the Eskom Municipal Debt Relief Support Programme could rise to 67 from the 28 already approved at the start of October.

The deadline for applications was extended to October 31, from an initial deadline of the end of September, to allow for further voluntary applications.

Speaking at the group’s results presentation, during which it was confirmed that arrear municipal debt had increased from R44-billion in 2021/22 to R58.5-billion at the end of March and had climbed to above R65-billion since, Bala said 39 additional applications were currently being assessed.

The programme, which was announced during the February Budget, is designed to enable Eskom to write off municipal debt, with 136 of the country’s 257 municipalities having been in arrears to Eskom at the end of March.

In return, municipalities committed to keeping their current accounts with Eskom up to date, which would help improve the lossmaking utility’s liquidity.

The State-owned utility reported a R24-billion loss for the 2022/23 financial year and warned of a further R23-billion-plus loss for the current financial year to the end of March 2024.

The writedowns will be implemented over three financial years should the participating municipalities meet the scheme’s 14 conditions, including minimum collections stipulations, a ringfencing of the Eskom account which should be paid first and a restriction on borrowings.

There is also the potential for a revocation of a municipality’s electricity distribution licence should it fail to comply with the conditions.

The National Treasury has confirmed that the collective debt owed to Eskom by the 28 municipalities approved for participation under the Programme represents R26.69-billion of the R58.5-billion owed to the utility as of the end of March.

Bala said that if the remaining 39 applicants were approved it would represent 95% of the arrear debt owed to Eskom.

After 12 months of compliance with the conditions, Eskom, in consultation with National Treasury, writes off one-third of the arrear debt balance as of March 2023.

Municipalities have to comply for all 36 months for the balance to be fully written off.