Newcastle Municipality owes Eskom millions of Rands worth of debt, will Newcastle be left in the dark soon?
Will Newcastle be one of six towns in KwaZulu-Natal left in the dark, due to exorbitant debt owed to Eskom?
This comes after Co-operative Governance and Traditional Affairs (Cogta) local government acting chief director, Sicelo Duma, said six municipalities were defaulting on payment arrangements they had with Eskom.
These municipalities are Mooi-Mpofana, Ulundi, Abaqulusi, Inkosi Langalibalele, Edumbe and Newcastle. Their collective debt tallies up to R300 million. Duma believes the swelling debt is mostly due to poor budgeting and inability to control electricity loses.
But just how much does Newcastle Municipality owe Eskom?
According to reports, Newcastle Municipality owes Eskom a staggering R74 million, with a five-month budget plan.
IFP Counsellor, Alex Liu claims the situation is very concerning. “The IFP keeps on warning the municipality about cutting costs, such as with body guards and VIP protection. The municipality’s financial situation is in serious danger. As an organisation, we need to cut down on unnecessary costs and ensure people pay for their services.”
Cllr Liu is not alone in thinking that something needs to be done about the current situation. DA Cllr Bertie Meiring believes the monies owed to Eskom is totally unacceptable. “The moment the electricity is cut, there will be huge trouble,” he explains.
This was due to the amount of businesses and homes relying on electricity. “The municipality keeps on postponing payment for other expenditure, which means we are battling to pay debt.”
Cllr Meiring believed one of the biggest problems was cash recovery for services rendered. If this was resolved, situations like this could be avoided in the future.
Newcastle Mayor, Makhosini Nkosi, explains that a large portion of this debt was from South African Calcium Carbide (SACC). “We as the municipality only owed R26 million, as R50 million is from SACC. While we have until July to pay the outstanding monies, we have already made payment towards the account.”
Cllr Nkosi further assured tax payers had nothing to worry about. “We could not expect the tax payers to pay towards the R50 million and we will use funds from the Equity Whole Share. But tax payers need not panic,” he concluded.
While the municipality attempts to resolve the issue, what are your thoughts about the matter? Do you feel the municipality needs to address its financial difficulties and how should they?