Energy

Eskom names and shames the worst municipalities in South Africa where most people don’t pay for electricity

Staff Writer

 ·21 Nov 2025

Power utility Eskom says it is facing an impending crisis due to municipalities not paying the billions of rands they owe in debt, with the 14 worst offenders owing over R62 billion.

Presenting the status on municipal debt to the portfolio committee on electricity and energy, Eskom acting group executive for distribution, Agnes Mlambo, said that the rising debt bill was a significant threat to Eskom’s turnaround.

If left unresolved, the debts would undo the gains of Eskom’s R250 billion debt relief programme—the government’s latest bailout of the group—and would force the utility back to Treasury’s door for another handout.

Eskom said that the municipal debt crisis was so egregious that it was preventing the group from following through with its unbundling plans, urging the government to intervene.

The National Treasury delivered on some of these interventions, by backing a plan to allow Eskom to take over municipal electricity services temporarily, for a defined period, and assisting with bill collections.

This plan is to move defaulting municipalities onto Eskom’s Distribution Agency Agreements (DAAs).

Eskom noted that most municipal debt is caused by a combined result of weak collections, excessive electricity and water losses due primarily to a lack of maintenance, and inadequate credit control.

By moving on to DAAs, measures can be taken to help municipalities raise revenue, including expanding smart metering.

The national utility has seen some success with DAAs, and with Treasury’s endorsement, the system will be integrated with the group’s debt relief programme.

This will see successful municipalities—those that comply with the requirements—have some of their debts written off.

However, Eskom noted that it would cancel the DAA and programmes if municipalities failed to meet their payment obligations.

The worst municipalities for Eskom debt

Eskom said that municipal debt growth poses a risk to the entire electricity industry.

Municipal debt has risen sharply over the past five years, shooting up from R28 billion in FY 2020 to R105 billion at September 2025.

Debt levels grew 27% between 2024 and 2025, and have already increased 11% from April to September 2025.

There are 71 municipalities currently participating in Eskom’s debt relief programme, representing R55 billion in ring-fenced debt—but they are overwhelmingly non-compliant.

Of the 71 municipalities, only 11 are sticking to their obligations. This reflects only about R831 million of the debt.

Through the DAA, Eskom hopes to improve these outcomes.

Eskom stated that its renewed focus on municipal debt will be concentrated on the top 14 defaulting municipalities in the country, which collectively represent around 58% of all arrear debt.

These municipalities owe a total of R62.3 billion in debt, with a payment level of only 31%.

Some municipalities—such as the Free State’s Ngwathe Municipality—have payment levels as low as 6%, where few people actually pay for what they use.

However, the utility has also urged the Treasury to issue a circular with conditions that mandatory DAAs are to be concluded for all defaulting municipalities.

The group identified the worst municipalities and the amounts they owe: