South Africa’s top 130 municipalities could write off R8.6 billion of bad debt for the third quarter, hampering their ability to maintain sewerage systems and streets and pay money owed to suppliers, including Eskom.
Total debt impairments for these metropolitan, district and city councils rose 33% in the three months through 30 September from the second quarter and more than doubled from a year earlier, according to data released by Statistics South Africa on Thursday.
South African city councils struggle to collect payments for services and were owed R306.7 billion by consumers by the end of September, Treasury data showed last week.
In turn, municipalities’ arrears to Eskom rose to R70 billion from R58.5 billion six months earlier, adding to the embattled state-owned power utility’s cash-flow problems.
As part of the debt-relief package that the National Treasury announced for Eskom in February, the utility will write off some municipalities’ debt to improve its balance sheet.
“Non-payment of municipal debt remains a systemic challenge,” Eskom said in its interim results statement on Wednesday.