The National Treasury has approved the application of Lekwa Local Municipality to be admitted into Eskom Debt Relief Programme.
Eskom Debt Relief Programme is aimed at writing off municipalities’ Eskom debt as of 31 March 2023 over a three-year period in equal annual tranches.
Lekwa Local Municipality had been owing Eskom for unpaid buik electricity services and the debt has grown exponentially because the municipality could not pay due to financial challenges.
The municipality owed Eskom R1.8 billion as at 31 March 2023, including interest and penalties and the amount include the existing payment arrangements with Eskom.
In the letter approving the municipality’s application, National Treasury’s Deputy Director-General: Intergovernmental Relations said: “…We applaud the municipality for committing towards basic best practice financial management as envisaged in the MFMA and Municipal Systems Act and look forward to a positive behavoural change culminating in full debt relief to Lekwa LM over the next 36 consecutive months.”
Executive Mayor, Cllr. Delani Thabethe said: “This another endorsement that our efforts has indeed taken this municipality out of dysfunctional zone and is now functional as we have met the toughest conditions for our application to participate on this debt relief programme approved by the National Treasury.
“Writing off Eskom debt will greatly assist as we are currently owing Eskom way higher than our total annual budget as the municipality and we committing to do everything possible to continue meeting the conditions of this debt relief programme as set out in the Circular (MFMA Circular No. 124 https://bit.ly/43DcphL).”
He indicated that while the approval of the Debt Relief by the Treasury must be celebrated but it also means more work must now be done to ensure that those that must pay for their services pay on time and those that are indigents must fill in the necessary application forms to be classified as indigents.
Thabethe added that in the next few days the municipality will make announcements on the measures to be introduced by the municipality to encourage residents to pay for their services and assist those who cannot pay.
During the Medium-Term Budget Policy Statement (MTBPS) on 01 November 2023, the Minister of Finance, Enoch Godongwana said: “The ultimate goal is the profound transformation of these municipalities, by empowering them to build financial resilience, amplify their capacity to generate sustainable revenue, and rekindle a culture of paying for services rendered.”