Liquidate municipalities to pay ESKOM & water boards - Paul Nel

BizNews Radio

Financial Compliance expert Paul Nel of Prisma says the solution to collecting the R92 billion owed to ESKOM by municipalities and the billions owed to Water boards is to liquidate dysfunctional municipalities in terms of the Municipal Finance Management Act after all the intervention processes of provincial and National Treasury have failed. “…it’s more of a business rescue. It's not the same as what we understand on the liquidation with the private sector or any other business or private person where all the assets are sold. Not with a municipality. It is only the non-essential assets that must be sold and the full amount of that should be provided for full settlement for all its obligations, which is basically ESKOM and Water Boards." Nel says, in terms of the MFMA, a court order could also be obtained to get rid of the whole council as well as of all officials that are not adding value to the municipality. “…the big advantage of such a drastic step is that you will have a Metro or municipality with a clean sheet with no obligations.” Nel also provides figures on how ESKOM has overcharged the consumer since 2009, and gives his take on the reasons behind the continued high tariff increases. He was one of those who made a presentation to The National Energy Regulator of South Africa (NERSA) on the proposed 66% tariff hikes over the next three years.