Eskom’s R200 billion problem – that customers have to pay for 

Municipalities owe Eskom a staggering R85 billion, a figure projected to rise to R200 billion by 2028—and Eskom hopes to recover this debt from paying customers.

Municipal debt is putting Eskom’s financial stability at serious risk, with only 14 out of 72 municipalities paying as they should. If this issue isn’t addressed soon, Eskom may need another bailout. 

The utility is hoping to recover at least half of this year’s outstanding debt from paying customers.

In fact, the company plans to raise prices by 36% in 2025, followed by increases of 11.8% and 9.1% in 2026 and 2027.

Eskom Chief Financial Officer, Calib Cassim, explained to Newzroom Afrika that the already high municipal debt has skyrocketed this year.  

“Currently the total areas owing to Eskom is R85 billion, but if I just bring it down to this financial year – in the first five months, for from April to August, it has grown by 11 billion.”

He said that what is more concerning is that this growth isn’t just coming from small municipalities. In fact, half of the R11 billion increase has come from metropolitan areas. 

“This average is close to two billion per month, and if one extrapolates that you’re going to get over R20 billion growth per annum, which is clearly unsustainable from an Eskom perspective.”

Cassim explained that this debt is expected to keep growing to an estimated R100 billion by March 2025, and R130 billion by March 2026.  

By March 2028, municipal debt is set to reach about R200 billion.

While Eskom is benefiting from a R254 billion debt relief package, Kasim warned that this relief will be negated if municipal debt keeps growing.

“If the municipal growth is not arrested then effectively that relief is nullified through the growth of the Municipal debt which doesn’t does not help with Eskom’s financial sustainability.”

“We want to be in a position after the debt relief that we don’t rely on the fiscus going forward.”  

Although Eskom remains on track to make a profit next year, this poses a serious threat to that goal, he added.

SALGA’s Head of Energy, Nhlanhla Ngidi, explained that despite a debt relief incentive, municipalities are still struggling to pay Eskom due to a ”myriad” of underlying issues. 

He pointed out that some of the conditions attached to the government’s debt relief program are overly optimistic and impractical. 

For example, municipalities were expected to start paying their current Eskom bills almost immediately after joining the relief program. 

However, they are already dealing with systemic issues such as financial losses, vandalism, and non-payment from residents. 

Instead, he argued that municipalities should have been given time to fix some of their underlying problems before being expected to make these payments. 

Municipalities are currently owed around R347 billion by customers, and as a result, even typically reliable metros are struggling to pay Eskom. 

According to Ngidi, municipalities want to pay this debt, but underlying economic conditions, systemic issues, and the country’s stagnant economy are making it difficult. 

“For them to thrive they need to also operate in an economy that is growing, and currently, the economy is not growing.” 

The current funding model, which was established over 20 years ago, assumed that municipalities would generate 90% of their revenue from consumers.

However, customers are struggling with the same problems and are struggling to make ends meet. 

“We know what’s happening with the consumer right now. There’s high unemployment, the economy is not growing people are not working some people are actually genuinely constrained financially.”

Ngidi stressed that collaboration between Eskom, government, and municipalities is needed in order to bring about structural and systemic changes which are urgently needed to stop this debt from growing even further. 

“We need to be more practical.” 

“We need the solutions that are going to resolve the immediate issues, that are going to assist municipalities to never miss a current account of Eskom, then deal with the other isues that have created the historical debt.”

Read: Eskom lays the blame for wanting a massive 36% price hike