Energy

Andre de Ruyter warns Eskom can be left with mainly non-paying customers

As an increasing number of South Africans turn to alternative power solutions, Eskom may soon be left with customers who cannot afford or refuse to pay for electricity.

This is feedback from former Eskom CEO Andre de Ruyter, who told Business Day Spotlight that Eskom’s current path is unsustainable.

“If you extrapolate from current trends, Eskom will eventually be left with a customer base of people who cannot afford electricity and therefore don’t pay for it,” he warned.

This comes as more South Africans have turned to energy sources like solar panels as a more reliable alternative to the state-owned power utility.

South Africans experienced the worst load-shedding in history in 2023, with 335 days of load-shedding in the year.

This saw a significant uptick in solar installations from both businesses and households. 

South Africa imported over R16.5 billion worth of solar panels in the first nine months of 2023, equal to over 4,500 MW in generation capacity. 

From the beginning of 2023 to the end of 2025, RMB estimates that the private sector will add over 6,000 MW to the grid. From 2025 to 2030, it will add a further 19,300 MW. 

However, only wealthier South Africans can afford these alternative options, while poorer citizens are still reliant on Eskom.

De Ruyter explained that if this trend continues, Eskom will be left with only non-paying customers, who can either not afford electricity or refuse to pay. This can include private citizens and municipalities.

Eskom already faces severe challenges with non-payment from citizens and municipalities. 

In the utility’s interim results for the first six months of the financial year to the end of September 2023, Eskom said municipal debt has continued to escalate from already unsustainably high levels. 

In 2018, invoiced municipal debt totalled a mere R13.6 billion. This has grown to R70 billion at the end of September 2023, a 32% increase from the year before. 

The payment levels of municipalities continued to deteriorate, declining by 2% in the 2023 financial year to 76%.

The top 20 defaulting municipalities pay less than half of their invoiced amount, with a 46% payment level. 

Electricity Minister Kgosientsho Ramokgopa has previously said he is deeply concerned about the financial health of many municipalities that owe Eskom billions. 

“The finances of municipalities are very illiquid. Some are insolvent and are not raising sufficient revenue to meet their operational activities.”

Ramokgopa lamented the impact non-payment has on Eskom’s operations as municipalities’ failure to pay inhibits the utility’s ability to invest in the maintenance of its plants and expanding the grid. 

The Minister added that if the debt owed by municipalities remains unaddressed, it will increase exponentially and place an unsustainable burden on Eskom.

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