The impact of failure to make payment behaviour on the profitability of South African municipal electricity suppliers.

Kansilembo Freddy ALIAMUTU; Msizi  MKHIZE

doi:10.38142/ijesss.v5i3.889

Authors

Kansilembo Freddy ALIAMUTU University of Kwazulu Natal, South Africa
Msizi MKHIZE University of Kwazulu Natal, South Africa

DOI:

https://doi.org/10.38142/ijesss.v5i3.889

Keywords:

Electricity supply, municipal profitability, bad debts, failure to make payment behaviour and Grant

Abstract

Failure to make payments for labour remains a source of concern in the provision of municipal services in South Africa. According to literature, the tradition of failure to make payment rates from the apartheid period, when widespread civic resistance expressed itself via refusing rate paying. The research investigates the influence of South Africa's failure to make payment behaviour on municipal profitability. The random-effects model is utilised to evaluate the connection among the profitability and failure to make payments for 28 municipalities from 2007 to 2022. The findings show that failure to make payments has negative effects on profitability. Profitability is lowered by R291 with each R1000 higher number of unpaid debts written down. Furthermore, national government funds, the total number of users, and the proportion of home units getting free basic electricity all have a positively impact on profitability. These findings support the necessity for more inventive techniques to transform failure to make payment into a payment behaviour.

Downloads

Download data is not yet available.

References

ADOM, P. K., BEKOE, W. & AKOENA, S. K. K. 2012. Modelling aggregate domestic electricity demand in Ghana: An autoregressive distributed lag bounds cointegration approach. Energy policy, 42, 530-537.

ALAO, M. A., POPOOLA, O. M. & AYODELE, T. R. 2022. Projecting the energetic potential and economic viability of renewable power generation from municipal solid waste: Indication from South African Provinces. Energy for Sustainable Development, 71, 352-367.

ALI, S., YONGZHI, M. & ALI, W. 2023. Prevention and Detection of Electricity Theft of Distribution Network. Sustainability, 15, 4868.

AMANKWAA, G., HEEKS, R. & BROWNE, A. L. 2023. Smartening up: User experience with smart water metering infrastructure in an African city. Utilities Policy, 80, 101478.

AMUSA, H., AMUSA, K. & MABUGU, R. 2009. Aggregate demand for electricity in South Africa: An analysis using the bounds testing approach to cointegration. Energy policy, 37, 4167-4175.

AYAMOLOWO, O. J., MANDITEREZA, P. & KUSAKANA, K. 2022. South Africa power reforms: The Path to a dominant renewable energy-sourced grid. Energy Reports, 8, 1208-1215.

BAKER, L. 2017. Commercial-scale renewable energy in South Africa and its progress to date.

BETTI, G., D’AGOSTINO, A. & NERI, L. 2002. Panel regression models for measuring multidimensional poverty dynamics. Statistical methods and applications, 11, 359-369.

BIEGLER, T. 2009. The hidden costs of electricity: externalities of power generation in Australia.

BOND, P. 2022. Climate, violence, resource extraction and ecological debt: global implications of an assassination on South Africa's coal mining belt. Globalizations, 1-15.

BRÜDERL, J. & LUDWIG, V. 2015. Fixed-effects panel regression. The Sage handbook of regression analysis and causal inference, 327-357.

CAO, H., KHAN, M. K., REHMAN, A., DAGAR, V., ORYANI, B. & TANVEER, A. 2022. Impact of globalization, institutional quality, economic growth, electricity and renewable energy consumption on Carbon Dioxide Emission in OECD countries. Environmental Science and Pollution Research, 29, 24191-24202.

CHAMBERLAIN, G. 1982. Multivariate regression models for panel data. Journal of econometrics, 18, 5-46.

EBERHARD, A. & NAUDE, R. 2016. The South African renewable energy independent power producer procurement programme: A review and lessons learned. Journal of Energy in Southern Africa, 27, 1-14.

GIDDY, J. K., ROGERSON, C. M. & ROGERSON, J. M. 2022. Rural tourism firms in the COVID-19 environment: South African challenges. Geo Journal of Tourism and Geosites, 41, 343-353.

GRACZYK, A. M., KUSTERKA-JEFMA?SKA, M., JEFMA?SKI, B. & GRACZYK, A. 2023. Pro-Ecological Energy Attitudes towards Renewable Energy Investments before the Pandemic and European Energy Crisis: A Segmentation-Based Approach. Energies, 16, 707.

HADEBE, D. & GEERINGH, J. Electricity Supply to Africa and Developing Economies–Challenges and Opportunities. 8th Southern Africa Regional e Conference, 2017.

HALUNGA, A. G., ORME, C. D. & YAMAGATA, T. 2017. A heteroskedasticity robust Breusch–Pagan test for Contemporaneous correlation in dynamic panel data models. Journal of econometrics, 198, 209-230.

HANTO, J., SCHROTH, A., KRAWIELICKI, L., OEI, P.-Y. & BURTON, J. 2022. South Africa's energy transition–unraveling its political economy. Energy for Sustainable Development, 69, 164-178.

KABEYI, M. J. B. & OLANREWAJU, O. A. 2022. Performance analysis and electricity potential for Nzoia sugar factory. Energy Reports, 8, 755-764.

KALINA, M., MAKWETU, N. & TILLEY, E. 2023. “The rich will always be able to dispose of their waste”: a view from the frontlines of municipal failure in Makhanda, South Africa. Environment, Development and Sustainability, 1-24.

KLUG, T. W., BEYENE, A. D., MELES, T. H., TOMAN, M. A., HASSEN, S., HOU, M., KLOOSS, B., MEKONNEN, A. & JEULAND, M. 2022. A review of impacts of electricity tariff reform in Africa. Energy Policy, 170, 113226.

LIN, B. & OKYERE, M. A. 2023. Race and energy poverty: The moderating role of subsidies in South Africa. Energy Economics, 117, 106464.

LIN, B. & SAI, R. 2022. Towards low carbon economy: Performance of electricity generation and emission reduction potential in Africa. Energy, 251, 123952.

LIU, X., TAN, Q., NIU, Y. & BABAEI, R. 2023. Techno-economic analysis of solar tracker-based hybrid energy systems in a rural residential building: A case study in South Africa. International Journal of Green Energy, 20, 192-211.

LIU, X., ZHANG, S. & BAE, J. 2022. Nonlinear analysis of technological innovation and electricity generation on carbon dioxide emissions in China. Journal of Cleaner Production, 343, 131021.

LUKAMBA MUHIYA, J.-M. 2008. Evaluating power trading in selected countries of the Southern African Development Community. Cape Peninsula University of Technology.

LUKAT, E., PAHL-WOSTL, C. & LENSCHOW, A. 2022. Deficits in implementing integrated water resources management in South Africa: The role of institutional interplay. Environmental Science & Policy, 136, 304-313.

MAGAGULA, D. N., MUKONZA, R. M., MANYAKA, R. K. & MOETI, K. 2022. The role of district municipalities in service provision in South Africa: Dissecting challenges faced by Ehlanzeni District Municipality. Africa’s Public Service Delivery and Performance Review, 10, 628.

MAJADIBODU, M. J. 2023. Challenges facing small and medium enterprises at the Lephalale Local Municipality of Limpopo Province in South Africa.

MAMOKHERE, J. 2022. Understanding the Complex Interplay of Governance, Systematic, and Structural Factors Affecting Service Delivery in South African Municipalities. Commonwealth Youth & Development, 20.

MAZELE, O. & AMOAH, C. 2022. The causes of poor infrastructure management and maintenance in South African municipalities. Property Management, 40, 192-206.

MCDAID, L. 2014. Renewable Energy Independent Power Producer Procurement Programme Review 2014. Electricity Governance Initiative South Africa, supported by World Resources Institute. Electricity Governance Initiative South Africa–REI4P review, 3, 3.

MCMANUS, P. Introduction to regression models for panel data analysis. 2015. Indiana University Workshop in Methods.

MENTEL, U., WOLANIN, E., ESHOV, M. & SALAHODJAEV, R. 2022. Industrialization and CO2 emissions in Sub-Saharan Africa: the mitigating role of renewable electricity. Energies, 15, 946.

METH, P., BELIHU, M., BUTHELEZI, S. & MASIKANE, F. 2023. Not entirely displacement: conceptualizing relocation in Ethiopia and South Africa as “disruptive re-placement”. Urban Geography, 44, 824-849.

MILLINGTON, N., STOKES, K. & LAWHON, M. 2022. Whose value lies in the urban mine? Reconfiguring permissions, work, and the benefits of waste in South Africa. Annals of the American Association of Geographers, 112, 1942-1957.

MOKHETHI, K. E. 2020. The impact of independent power producers entering the South African electricity supply industry.

MURSHED, M. & OZTURK, I. 2023. Rethinking energy poverty reduction through improving electricity accessibility: A regional analysis on selected African nations. Energy, 267, 126547.

NEL, D. 2017. Sustainable management of independent power production in South Africa. Administratio Publica, 25, 26-41.

NKOANA, E. Participatory Governance and Social Acceptance Challenges in Utility-Scale Renewable Energy Deployment in South Africa: A Bird’s Eye View. South African Association of Public Administration and Management, The 5th Annual Conference on, 2016. 237-245.

OCHINANWATA, C., IGWE, P. A. & RADICIC, D. 2023. The institutional impact on the digital platform ecosystem and innovation. International Journal of Entrepreneurial Behavior & Research.

ONAOLAPO, A. K., CARPANEN, R. P., DORRELL, D. G. & OJO, E. E. 2022. A comparative assessment of conventional and artificial neural networks methods for electricity outage forecasting. Energies, 15, 511.

SIKSNELYTE-BUTKIENE, I., STREIMIKIENE, D., BALEZENTIS, T. & VOLKOV, A. 2023. Enablers and barriers for energy prosumption: Conceptual review and an integrated analysis of business models. Sustainable Energy Technologies and Assessments, 57, 103163.

SONDAY, A. 2021. The impact of the South African Renewable Energy Independent Power Producers Procurement Programme on South African communities: A case study. Faculty of Commerce.

SWARTZ, K. 2019. Addressing community energy challenges with utility-scale renewables: A case study of Hopefield Wind Farm. Stellenbosch: Stellenbosch University.

T. SINDANE, J. & S. MODLEY, L.-A. 2022. The impacts of poor water quality on the residential areas of Emfuleni local municipality: A case study of perceptions in the Rietspruit River catchment in South Africa. Urban Water Journal, 1-11.

TALIOTIS, C., MIKETA, A., HOWELLS, M., HERMANN, S., WELSCH, M., BROAD, O., ROGNER, H., BAZILIAN, M. & GIELEN, D. 2014. An indicative assessment of investment opportunities in the African electricity supply sector. Journal of Energy in Southern Africa, 25, 02-12.

THOPIL, G. A. & POURIS, A. 2015. Aggregation and internalisation of electricity externalities in South Africa. Energy, 82, 501-511.

THUSI, X. & SELEPE, M. M. 2023. The Impact of Poor Governance on Public Service Delivery: A Case Study of the South African Local Government. International Journal of Social Science Research and Review, 6, 688-697.

VAN DER WALDT, G. & FOURIE, D. 2022. Ease of Doing Business in Local Government: Push and Pull Factors for Business Investment in Selected South African Municipalities. World, 3, 470-486.

VISSER, H. 2022. Energy procurement in the South African electricity supply industry–future scenarios for large power users.

WANG, J., FU, G. & LUO, C. 2013. Accounting information and stock price reaction of listed companies—empirical evidence from 60 listed companies in Shanghai Stock Exchange. Journal of Business & Management, 2, 11-21.

WANG, S., ZHAO, Y. & WIEDMANN, T. 2019. Carbon emissions embodied in China–Australia trade: A scenario analysis based on input–output analysis and panel regression models. Journal of cleaner production, 220, 721-731.