Media statement
4 October 2023
It is no secret that the City of Tshwane is in financial distress and that we are behind on our payments to Eskom.
We have been consistent and clear in conveying the reality of our financial situation and stipulating the difficult decisions that need to be carried out by Council, the Mayoral Committee and City management to get out of our financial distress.
The City’s budget that was adopted by Council in June 2023 is underfunded by at least R3 billion. So, Council also approved a funding plan that includes measures to achieve a funded status within three financial years.
One of these measures is to seek exemption from salary increases, even in the face of a violent, unprotected strike. One of the primary reasons for the City’s financial situation is the loss the City, along with many other municipalities in the country, is making on the sale of electricity.
This year, the country has had more load-shedding days than ever before. This wreaks havoc not just on the maintenance of our network, leading to heightened wear and tear, but also affects our funding model.
During load-shedding we cannot sell electricity and therefore struggle to cover fixed costs associated with the operation of our network.
The tariff approved by the National Energy Regulator of South Africa (Nersa) for the resale of electricity also does not cover our costs. Thus, we are finalising a cost of supply study to inform our submissions to Nersa for the next financial year. But most importantly, the City is taking the first steps to become more independent of Eskom as outlined in the energy plans announced by the Executive Mayor last month.
During the last Council meeting, a report for a relief application for the City’s Eskom debt was approved in terms of the framework established by the National Treasury. If accepted, this application will bring significant relief to our cashflow and financial situation.
We remain fully committed to our financial rescue mission in the City and carrying through the difficult decisions that the Executive Mayor has referred to consistently in his public statements.
Media enquiries:
Sipho Stuurman