By Odwa Mkentane
The Organisation Undoing Tax Abuse (OUTA) is backing a proposal by Eskom that funding for free basic electricity should be allocated directly to the power utility, rather than to municipalities.
OUTA says this would ensure that the funds benefit their intended recipients and help address challenges around non-payment.
Speaking to VOC, OUTA Executive Manager Julius Kleynhans says directing the funding straight to bulk service providers could reduce municipal mismanagement, improve infrastructure maintenance and provide greater relief to struggling communities.
“I think it’s a good idea. You know, firstly, it’s an unconditional grant, and that’s where the first mistake lies. Meaning that amount of equitable share is supposed to cover the basic service costs of free basic services to the most vulnerable communities, but it’s unconditional.
“So, it means that the municipality does not necessarily have to spend it on that. The intention is there, but they don’t have to, and I think that’s been the problem. You know, they have not allocated it to what it needs to go to, and unfortunately, people are suffering the consequences, especially vulnerable communities.
“That is where a lot of the illegal connections come from. People are forced to do this because they don’t get these grants that were supposed to get to them. I think the municipalities deserve it,” said Kleynhans.
Kleynhans blames municipal non-payment, poor management, corruption and weak regulation by NERSA for the growing financial problems facing Eskom and municipalities.
“There are 1.2 million households that qualify for free basic services. Every year, Treasury pays about R7 billion to the City of Johannesburg for these 1.2 million households to benefit from. However, only about 100,000 households actually benefit.
“So, we can see that less than 10% of these communities are benefiting from that funding. If you look at the R7 billion, I think around a third of that amount goes towards electricity specifically, and that can definitely go a long way.
“And that’s just the City of Johannesburg; it excludes all the other municipalities and metros.
“What we’re also seeing with Eskom at the moment is the impact of municipalities defaulting on their payments. Over time, what has happened is the neglect of duties, as well as incompetence, corruption, theft and all those things that come with it.
“Municipalities have not been paying the bulk service provider, and they have been bailed out annually by national government, as we’ve seen in the past. That has never been sustainable,” he said.
Kleynhans further added that, even though Eskom is talking about ring-fencing the equitable share, it also needs to review the pricing of electricity.
“With the escalation of costs over the next couple of years, Eskom could potentially price itself out of the market, particularly as renewable energy and other alternatives become cheaper.
“Whatever decisions are made, they need to be made responsibly, with a focus on serving the public and making electricity more affordable so that more people can have access to it.
“We all know that when everyone has access to electricity, it provides a very strong foundation for economic growth,” Kleynhans said.
Photo: Pixabay
