The City of Tshwane has struck a deal with Eskom to pay off its debt as mayor Nasiphi Moya and her team try to turn around the finances of the capital.
Yesterday Moya announced that the city had made a landmark agreement with Eskom to settle the R6.67 billion historical debt owed to the utility.
“This agreement, formalised as a court order on 26 November, is a significant milestone in our journey to financial recovery and stability.
Tshwane agreement with Eskom
“The arrangement outlines a structured repayment plan spanning five years, with the first payment of R400 million scheduled for December 2024. Additionally, the city has already paid R425 million in arrears for October 2024. A critical condition of this agreement is the timely payment of current accounts within 30 days of billing,” she said.
Moya said the settlement would end years of costly litigation and redirect the focus to improving service delivery and enhancing revenue collection systems.
“We will adopt stronger financial governance practices to ensure this never happens again,” she added.
Economist Dawie Roodt said: “The question is whether Tshwane’s cash flow will be able to keep it up because that’s why they are in trouble in the first place.”
Roodt said until the debt had been paid up, there was less budget for other needs in the city.
Less budget until debt paid up
DA Tshwane caucus leader Cilliers Brink said the announcement that the city has reached a settlement with Eskom on debt in arrears was good news, but it will require difficult decisions.
“It would seem that the writing off of Eskom’s interest on arrear debt is conditional on the city sticking to its payment plan.
“If this settlement becomes an order of the court, it will require iron-like financial discipline from Tshwane.
“If one Eskom payment is missed, it might mean that the deal is lost and that all arrears become due and payable immediately,” he said.
Brink said it was essential for Tshwane to continue with the Tshwane ya Tima campaign started by the previous municipal government to improve billing and collections.
Tshwane ya Tima campaign
“Like forgoing salary increases, Tshwane ya Tima is another difficult, but necessary, undertaking to get Tshwane out of trouble,” he said.
Brink said reality has hit home for the ANC-led coalition in Tshwane as it decides to proceed with the fight in the Labour Court to not pay salary increases to city officials.
Brink said a settlement agreement between Tshwane and Eskom over debt in arrears would not be possible if Tshwane made an unaffordable salary deal with unions.
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