The implantation of a universal electricity tariff system to cut debt owed by municipalities to Eskom is being considered by the utility and the South African Local Government Association (Salga).

The system, if implemented, is expected to bolster revenue collection for Eskom. Eskom and Salga have signed a memorandum of understanding in this regard.

Municipalities owe Eskom billions of rands. The government has also recently stated it was considering selling nonstrategic assets to help Eskom raise funds for its expansion programme.

One of the more significant examples of this mammoth debt is the R736 million owed by three municipalities in the Free State to the power utility.

The Minister of Co-operative Governance and Traditional Affairs, Pravin Gordhan, had stage an intervention in this episode, resulting a court interdicting Eskom from cutting power supply to the municipalities been secured.

These municipalities themselves are owed R92 billion in services from both residential and industrial consumers.

Salga CEO Xolile George says the MOU agreement aims to seek “systematic ways of helping Eskom get revenue” including the possible introduction of a universal prepaid system.

“Prepaid can help but in some cases municipalities will not be able to afford the infrastructure for the system,” he points out.

“The work team implementing the agreement will work on proposals to National Energy Regulator of SA for a uniform tariff planning and tariff system.”

Eskom executive for distribution Ayanda Noah states the agreement provides an opportunity to understand challenges faced by municipalities in terms of collecting revenue.

“We have been talking about active partnering for a long time. At the moment we are doing badly in terms of the economic growth of the country and there is a huge power constraint.”