Millions missing out on free electricity as Eskom calls for grant reform

Eskom wants the free basic electricity (FBE) grant to be reviewed so that it can reach the intended poor households and that the 50 kilowatts introduced be increased after two decades of introduction.

The power utility also wants to administer the disbursement of the grant to indigents and that it handles the billing and revenue collection on behalf of councils, among other things.

These are some of the proposals Eskom outlined with the standing committee on public accounts (Scopa) on Thursday as a way to deal with the spiralling R100 billion debt owed to it by municipalities.

The proposals come as municipalities use revenue generated from electricity to plug holes in what should have been collected in rates and services from residents, while Eskom was unpaid and infrastructure not being maintained.

Electricity and Energy Minister Samantha Graham-Mare said the municipal debt was a huge concern.

“Both the minister and I are meeting municipalities to find ways to support them and find out what the issues are. We are coming up with strategies to address the municipal debt in individual municipalities,” Graham-Mare said.

She noted that 71 municipalities were on the National Treasury’s debt relief programme.

At least 67 are classified as “defaulters” and 14 as “chronic defaulters”.

A presentation to Scopa showed that of the 71 municipalities, 23 honoured their current account as of March 2024, but the number decreased to 10 in November 2024.

“Arrear debt continues to escalate due to poor adherence to the municipal debt relief conditions, with more recent challenges with metros.”

Graham-Mare said part of the problem was that the National Treasury designed a programme for municipalities to comply with, but they have not been given additional resources to actually address situations that they are in, in the first place.

“Again, Eskom is on the receiving end of poor decision-making policy and constraints in the municipal space. We are looking at ways to find strategies to support municipalities to be more financially viable because it is in everybody’s interest for municipalities to have profitable and working electricity businesses so that they continue to be sustainable.”

Graham-Mare said the major focus for her, Minister Kgosientsho Ramokgopa, and the department was to find ways to address the municipal debt and ensure sustainability of Eskom.

“If municipalities fail, this country fails. So it is not in anybody’s interest to allow that to happen,” she said.

Eskom’s distribution executive Monde Bala said Eskom has put together a programme to find solutions for struggling municipalities.

“We acknowledge and understand the role of electricity business within municipalities in terms of sustainability. Municipalities are battling to collect and bill. There is also an issue of skills,” Bala said.

He said each municipality has its own nuances and their starting point was to be able to claw back what Eskom billed.

“The electricity business within municipalities should be ringfenced so that revenue can be transparent.”

Bala also said capital investment for infrastructure was required for assets of the councils.

“There is a funding capital requirement that will be necessary to start to refurbish the existing network and make sure we meter and bill municipal customers to collect revenue on behalf of the municipalities.”

He added that Eskom was proposing that the FBE grant be reviewed.

“We hold the view that FBE is inadequate for 2025. When FBE was introduced two decades ago, it would have been adequate. The 50 kilowatts need to be reviewed.”

He also said the way the FBE grant was administered made it difficult to get to the poor households.

“We need to design the grant to get to the recipients. From Cogta to municipalities, it does not find its way to the intended recipient. So we need to find a way that the grants get to the intended recipient. We are working with the Minister of Electricity to come up with proposals we will socialise with other stakeholders in government.”

CEO Dan Marokane said Statistics South Africa estimated that 10 million households qualified for the FBE, but only two million were benefitting.

“Even in terms of talking about increasing the FBE, we have to drive access to ensure the number equals to those estimated to access it,” Marokane said.

Bala said the National Treasury’s debt relief has yielded limited success.

“We see emergence of big municipalities and metros that were not a problem start to be a problem.”

He added that there should be consideration of moving struggling municipalities to the prepaid electricity system.

Bala said there has been chronic under-investment in electricity infrastructure and an inability to expand the infrastructure; and in Maluti-a-Phofung, there were no meters to bill residents.

mayibongwe.maqhina@inl.co.za