By Morné Mostert
Manager Local Government Affairs AfriForum
AfriForum has sent a formal letter to the National Energy Regulator of South Africa (NERSA) in which the civil rights organisation demands urgent regulatory action against municipalities that fail to comply with the provisions of the National Treasury’s debt relief plan.
AfriForum further requests that these municipalities’ distribution licenses be revoked and that private entities be given the opportunity to take over the distribution of electricity.
The municipal debt relief programme was launched by the Minister of Finance in February 2023.
The programme aims to write off a portion of municipalities’ arrears to Eskom, provided they meet strict financial management requirements over a period of 12 to 36 months.
A key point is that municipalities that do not meet the conditions of this programme must acknowledge their own incompetence and voluntarily apply to NERSA to have their electricity distribution licences revoked.
This provision opens a gap in the market for Eskom or other competent entities to take over the distribution of electricity, which could result in better and more reliable service delivery.
AfriForum is now demanding that if the distribution licenses of municipalities are revoked, they should not be automatically transferred to Eskom, but that the process of issuing a new distribution license be opened up to private entities that can also provide this service.
AfriForum points out that 71 municipalities nationwide are participating in the debt relief program, but that at least 60 of them have already received official warning letters from the Treasury for their continued failure to comply with the conditions.
Yet there is no clear action from NERSA on the situation.
“The debt relief programme was intended to ensure accountability and sustainable service delivery, not to enable municipalities to continue with poor governance without consequences,” says Morné Mostert, Manager of Local Government Affairs at AfriForum.
“When municipalities breach this contractual agreement and continue to operate without consequences, it is clear that regulatory structures such as NERSA must intervene.
Should NERSA not help to ensure that contractual agreements are met, this debt relief programme, like most initiatives driven by the state, will bear little fruit.”
In addition to the demands made, AfriForum also requested NERSA to confirm, among other things, whether:
the regulator has received any notifications from Eskom, the Treasury or even municipalities regarding violations of the debt relief conditions; any municipalities have already applied to have their licenses revoked in terms of the applicable legislation; there are any approved service delivery agreements with Eskom or third parties; and other competent service providers are being considered.
“The public deserves an electricity industry based on transparency, accountability and effective management – not on political patronage and debt write-offs without real action,” Mostert concludes.
AfriForum demands that NERSA respond to the letter within 14 days. The civil rights organisation reserves the right to consider taking legal steps if no action is taken.