By Lehlohonolo Lehana.
Municipalities that have been approved to participate in a debt relief programme to write off arrears debt owed to Eskom will be the first to benefit from a new conditional grant for smart prepaid meters.
In the Budget Speech tabled by Finance Minister Enoch Godogwana, “A new conditional grant will be created to fund the rollout of smart prepaid meters, initially in municipalities that have been approved for Eskom debt relief. The National Treasury will distribute this grant.”
“A total of R2 billion has been allocated for the grant, made up of R500 million in 2024/25, R650 million in 2025/26 and R800 million in 2026/27,” He said.
The 2024 Budget introduced amendments to conditional grant frameworks to improve service delivery and address financial pressures in municipalities.
“Sadly, an unacceptable number of [municipalities] are experiencing weaknesses in governance, financial management, and service delivery. To address these challenges, and to transform municipalities into engines of growth, we have adopted a multi-pronged approach. It focuses on tightening budget processes, ramping up oversight, increasing the skills and capacity of municipal employees, and driving investment in maintaining and buiding infrastructure”, Godongwana said.
The debt relief programme for municipalities that owe arrears debt to Eskom was launched in May 2023. It allows municipalities to have their Eskom debt written off systematically over three years. To qualify, municipalities have to comply with 14 financial management and other conditions, including keeping up with current account payments to Eskom.
According to the 2024 Budget Review, 72 municipalities applied for debt relief for arrears debt to Eskom.
“By December 2023, 72 applications had been submitted, totalling R56.7bn, or 97% of total municipal debt owed to Eskom at end‐March 2023. 70 applications, totalling R55.2bn, had been approved as of January 2024,” said Godongwana.
By October 2023 Eskom debt by municipalities stood at R64bn and Eskom projected debt owed by municipalities could increase to R68bn by end-March 2024.
Meanwhile Godongwana said although structural reforms have made “good progress”, load shedding and freight rail challenges remain an obstacle.
“We have embarked on a broad structural reform agenda that aims to address the challenges that have held back our growth.
“This agenda has included areas like electricity, logistics, water, telecommunications and visa reforms. The Budget Review details the good progress that has been made in these areas over the past few years. But, obstacles remain and let me focus on the two largest of these, “Godongwana said.
Godongwana said the rolling power cuts “disrupt production, operations and livelihoods”.
“Reforming the sector will result in long-term energy security. We took the necessary decisions in the past five years and these are bearing fruit.
“To promote further investments in renewable energy, this budget proposes an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime, from 15 megawatts to 30 megawatts,” he said.
He revealed that in the coming week, the report on the independent review of Eskom’s coal-fired power stations will be released.
“The review was done to inform part of the conditions attached to the debt relief plan. The recommendations will feed into Eskom’s corporate plans to bolster accountability and oversight.
“It is through the combination of private investment in new energy projects, rooftop solar installations and improvements in Eskom’s generation fleet that load shedding will reduce, and reliability and security of supply improve,” he said.
Turning to South Africa’s logistics challenges, the Minister revealed that third-party access to the freight rail network will be introduced by May 2024.
“In ports, a private partner has been secured to upgrade Pier 2 of the Durban Container Terminal. This should increase private investment in equipment, enhance technological capability and improve operational efficiency.”
“Government has provided Transnet with a R47 billion guarantee facility to support the entity’s recovery plan and meet its immediate debt obligations, added Godongwana.