Former Eskom CEO Brian Molefe, taken with former Transnet CEO Siyabonga Gama, when they were sworn in as Members of Parliament in July. Picture: Phando Jikelo / Independent Newspapers
Former Eskom CEO and MK party MP, Brian Molefe, yesterday said the power utility should put the whole country on prepaid electricity to avoid increasing municipal debt.
This comes as the Eskom board and executives yesterday told Parliament that the R90 billion municipal debt, increasing by about R1.5 billion, a month was amongst the crippling factors to the utility’s performance.
Eskom reported limited success with the Municipal Debt Relief programme, with low adherence to the debt-relief conditions having resulted in municipal debt, including metros, growing by more than R10bn per year.
Speaking as Eskom presented in 2024/2025 performance report to the Portfolio Committee on Electricity and Energy, Molefe said Eskom would actually be able to borrow from its consumers as they pay in advance rather than being in arrears.
“What will it take to put the whole of South Africa on prepaid because in that way, a municipality has to prepay for electricity. There won’t be an issue of 30 days debt, which goes to three years to five years and so on,” Molefe said.
“A long time ago there was an SMS (Soweto Midrand and Sandton) project of starting there to make them prepaid. I think it was distribution division at the time. What will it take? Is it something that you are entertaining to get the whole country to pay electricity prepaid?”
Eskom said over and above the National Treasury R450bn debt-relief guarantee and efficiency measures, it was implementing municipal debt recovery and ensuring an appropriate tariff, which is critical to financial sustainability.
Eskom reported that in the current year, it had incurred non-technical losses from theft, incorrect billing and illegal connections that make up more than 70% of all energy losses recorded.
The utility said while its Energy Availability Factor (EAF) had improved 8.41 percentage points, it had achieved R16.33bn reduction in diesel spend compared to the same period in the previous financial year, and reported a consistent decline in unplanned load losses on the back of disciplined execution of maintenance.
Eskom’s CEO, Dan Marokane, said the four pillars to financial recovery hinged on revenue security, debt reduction, cost containment and reduction in municipal non-payment.
“We have implemented cost efficiencies in our cost base, achieving on average R20bn cost reduction for the last three financial years,” Marokane said.
“To date, operational performance has led to reduced diesel expenditure by R16.33 bn. The debt-relief allowed the business to manage its high debt service costs and cash, to allocate the financial resources needed for generation to address the maintenance backlog and adequately prepare for outages.”
Eskom reported higher coal costs compared to the same period last year, from R45.3 bn to R49.64bn by September this year - a R4.3bn increase.
The utility said it was turning the corner in operational and financial performance, although there was still further work required to ensure sustainability of the industry.
It said it anticipated 2 524MW to be brought online by end of 2025 through the return of Medupi Unit 4 from long-term outage, ensuring successful implementation of Koeberg Unit 2 steam generator and the synchronisation of Kusile unit 6.
It said 3 470MW grid capacity could be made available through implementing curtailment in the Eastern and Western Cape, and had also commissioned 20MW of battery energy storage (BESS) in Worcester.
“Our pipeline of new clean energy and revised approach to the Just Energy Transition is intended to mitigate the socio-economic impact of the transition leadership stability and the improved staff morale has been fundamental to the turnaround,” Marokane said.
He said there had been a downward trend in unplanned losses, specifically driven by priority eight stations: Tutuka, Majuba, Kusile, Kendal, Matla, Duvha, Arnot and Kriel.
Eskom said current unplanned losses of about 11.5GW for October were better than anticipated in the summer outlook, and as a result, no load shedding was required.
Eskom experienced increased unplanned capacity loss factor (UCLF) in September and October due to challenges experienced at Medupi and Koeberg both, with spikes in their usual UCLF performance.
Comparing the average load losses in Sep-Oct 2023 of 15.2GW to the same period 2024 of 11.8GW showed an improvement of approximately 34GW, which further illustrated that there reduction in load shedding was a result of improved plant performance, it said.
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