Power crisis a crunch time for councils
RESIDENTS in 20 municipalities are anxiously watching Eskom’s plan to pull the plug on the provision of bulk electricity for its worst municipal defaulters.
Clearly the threat of Eskom acting on its right to cut off municipal defaulters (for several hours a day) represents a crisis not only for residents but also for the municipalities involved given that their competence and viability is in question.
While it can only be assumed that a June deadline is intended to find an acceptable repayment plan there is little doubt that the crisis represents a watershed for local government which is under unprecedented pressure. All but two of the 20 municipalities not only face the threat of bulk electricity cuts but have also had their equitable share grants withheld as a result of persistently poor financial governance. Until now the equitable share was a certainty for municipalities and the financial lifeblood for many small municipalities.
As presumably anticipated some municipalities are already said to have responded with vigorous credit-control measures as well as negotiating repayment plans with the Treasury.
But there will be municipalities that fail to respond within the deadline. This will place residents and businesses in a compromised position — especially if their own rates and utility bills are paid up.
Arguably there will be room for legal action by such residents. At the most simple level they have paid for something they are not receiving There has been a breakdown in the contractual understanding between councils and customers.
At a more complex constitutional level the planned cutoff questions the very basis for the existence of the municipalities in which affected residents live given their failure to provide basic services. The situation compromises not only the municipalities in question but also by implication the support systems in place to prevent financial default.
While many of the municipalities have been on various watch lists and even placed under administration checks and balances have apparently failed to get the basics (paying Eskom bills) right. To have 20 municipalities in such a precarious state places the entire intergovernmental system under scrutiny.
What then does the crisis mean for SA as a whole?
First Eskom is clearly the top priority. Ensuring Eskom is financially robust and operational in support of the country’s economy and investor sentiment trumps all other issues even if it affects the outcomes of local government elections.
Second there will be no more excuses for failure in local government and drastic action will be taken if necessary. National policy directives are playing hard ball. There are no longer excuses being made for outright financial mismanagement. Naming and shaming even if it is only by officials and not top-ranking politicians is out in the open and the basket cases will be exposed.
This outcome of the crisis is important for local government as it brings into play the sort of negative incentives for which the auditor-general has been calling for many years. It also provides a justification for a redrawing of municipal boundaries if improved viability can be demonstrated as an outcome and it vindicates the national government’s "Back to Basics" thrust.
Finally regional electricity distributors may return in effect taking electricity distribution away from incompetent municipalities.
The implications of increasingly expensive tariffs could also promote the idea of stricter more regionalised credit-control measures. This in turn could imply a far more regionalised model of service delivery for the sector.
Taken together these lessons suggest it is not just the residents in affected municipalities who should be carefully watching the unfolding saga but all who have an interest in local government and intergovernmental relations.