Beaufort West and Kannaland owe millions to both Eskom and the Auditor-General

28 Feb 2023

Four municipalities in the Western Cape owe Eskom just over R275-million and are sticking to repayment plans. This emerged as the provincial Treasury briefed the legislature on debts to the struggling energy company. But it’s not only Eskom that’s owed money – the Auditor-General is also trying to recover almost R50-million from municipalities in the Western Cape.

Western Cape municipalities Beaufort West and Kannaland were reported as owing money to state agencies Eskom and the Auditor-General (AG).

On Tuesday, the Western Cape legislature’s local government oversight committee heard from the provincial Treasury about municipalities that owed the two entities.

Beaufort West and Kannaland appear on both lists.

During the virtual meeting, Aziz Hardien, Chief Director: Financial Governance and Accounting in the provincial Treasury, said there had been “extremely good work” between the Treasury and municipalities to settle debts with Eskom.

Daily Maverick reported in June 2022 that four municipalities – Beaufort West, Matzikama, Cederberg and Kannaland – owed Eskom just over R250-million. At the time, the debts were broken down as follows:

Matzikama: R97,019,771

Beaufort West: R78,468,653

Cederberg: R47,811,007

Kannaland: R32,407,515

On Tuesday, while the department did not provide a breakdown of the figures, Hardien said the total amount of debt between the four municipalities stood at R275-million.

This represented 0,5% of the total municipal debt to Eskom nationwide, which Hardien said was the “smallest percentage” of debt owed to Eskom.

Free State and Mpumalanga municipalities owed the most to Eskom.

Daily Maverick has reported that by mid-year 2022, the total owed by all municipalities stood at over R50-billion.

Read more in Daily Maverick: "Eskom is owed R50bn by municipalities – This infographic shows which council owes what"

All four municipalities have payment plans in place, said Hardien, adding that councils were “bleeding” funds due to the rolling blackouts. Revenues were suffering, he said.

Daily Maverick reported how, in December 2022, Matzikama and Beaufort West – who both owe Eskom – suffered water supply problems due to equipment failure caused by prolonged power cuts.

Read more in Daily Maverick: "Rolling blackouts blamed for water outages in Western Cape municipalities"

In January, the Western Cape government allocated just over R88-million to municipalities for them to procure equipment such as generators to help deal with the power cuts.

Visit Daily Maverick's home page for more news, analysis and investigations

Auditor-General debt

The names of Kannaland and Beaufort West cropped up once again as they also owe another state agency. During the briefing, Hardien told the committee that Kannaland, Beaufort West, Laingsburg and Prince Albert owed the Auditor-General’s office in auditing fees.

Here’s a breakdown of those amounts:

Beaufort West: R17,466,702

Kannaland: R12,896,007

Laingsburg: R11,607,592

Prince Albert: R7,308,736

These areas, which fall under the Garden Route and Central Karoo district municipalities, were “some of the poorest municipalities in the country”, said Hardien.

When committee members questioned if municipal audit committees were involved in the auditing process, Hardien pointed to two issues: distances and leadership.

“Municipalities that struggle are in very rural areas,” he said, and additional expenses would be incurred if auditors had to travel for six hours to a meeting that might only last a short time.

Hardien said there were also other issues with auditing: “With coalitions, the administration is struggling to retain municipal or chief financial officers.”

Hardien added that without these key posts being filled, audit committees sometimes “cannot perform their duties”.

While Prince Albert is run by the Democratic Alliance, the other three municipalities are run by coalition governments made up of parties including the ANC, the Patriotic Alliance and the Independent Civic Organisation of South Africa.

Hardien told the committee the provincial Treasury was working with municipalities to better manage their audit fees, as well as talking to the AG’s office on the fees.

Provincial Treasury was closely monitoring the municipal debt, not only to Eskom and the AG’s office, but also to other entities, said Hardien.

After the meeting, the DA’s spokesperson on local government, Isaac Sileku, said:

“The DA has seen what is happening to municipalities in other provinces, and will not allow service delivery in this province to be compromised because of bad financial management and debt service costs.” DM

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Auditor-General debt