Eskom names and shames the worst municipalities in South Africa
Power utility Eskom says it is facing an impending crisis due to municipalities not paying what is owed, with the worst racking up a debt bill in the billions.
Presenting its results for the 2024 financial year on Thursday, Eskom reported a surge in municipal debt in the year to R74.4 billion, up 27% from the R58.2 billion in FY2023.
However, because the group’s financial results were nine months late, the reported figures don’t tell the whole story. From March 2024 to November 2024, municipal debt surged once again, this time by 28% to R95.4 billion.
The group warned that if nothing is done soon, the debt will continue to skyrocket, with projections reaching as high as R110 billion by March 2025.
Eskom said that the municipal debt issue risks the company as a going concern, as it has a massive impact on its finances.
The top ten defaulting municipalities make up more than half the total municipal debt owed, with the worst offending being the Emalahleni Municipality, owing R9.9 billion at November 2024.
While the group is heading towards posting its first profit in eight years in 2025, the municipal debt is a major drag on its books and could ultimately wipe out the R250 billion debt transfer granted to it by the National Treasury.
Electricity minister Kgosientsho Ramokgopa said that the burden of the municipal debt must be carried somewhere, and warned that it will ultimately be the South African taxpayer that will have to foot the bill in some way.
This is already happening at large with Eskom’s customer base, including the municipalities themselves, as the group is forced to apply for massive tariff increases every year—effectively placing the burden on paying customers.
Making matters worse is that the surge in municipal debt is happening despite the municipal debt relief programme.
In fact, eight of the ten worst offenders are on the programme, with the exception of the cities of Johannesburg and Tshwane.
According to Eskom, “arrear debt continues to escalate due to poor adherence to the municipal debt relief conditions, with more recent challenges with metros.”
While all of the worst municipalities have seen their debt burdens increase, Tshwane and Joburg have seen triple-digit growth in this debt, marking a veritable crisis for the metros.
This was evident in Eskom having to take legal action against the City of Tshwane on multiple instances on non-payment to get the metro to pay up. More recently, the utility threatened to cut power to the City of Joburg over its unpaid bills.
The doubling and quintupling of Eskom debts in Tshwane and Joburg reflect the deepening crises in these two metros, which have face breakdowns in service delivery and collapsing infrastructure amid cheap politicking and power struggles among political parties.
While the problems are particularly noticeable in the major metros, Eskom’s data shows that the municipal debt relief programme is failing at large.
According to the group, there are 71 municipalities participating in the programme, accounting for 95% of arrear debt (R58.5 billion) targeted for write-off.
However, by FY2024, only 23 municipalities were honouring their accounts (12% of the arrear debt), and by November 2024, this had decline to only 10 (2% of arrear debt).
Eskom said that the overall lack of compliance with the programme is a sticking point, as the conditions of the programme prohibit Eskom from pursuing action against non-compliant participating municipalities.
This will force the utility to remove municipalities from the programme and then pursue debt collection proceedings, legal action as well as system takeovers.
However, the group said that “more stringent measures” are needed, as defaulting municipalities are undermining the government’s efforts to address the energy crisis.
“Failure to resolve the municipal debt challenge may require further reliance on financial support from Government beyond March 2026 and will jeopardise the legal separation of Distribution, by threatening the financial viability of the separate Distribution company and, thereby, putting lender consent at risk,” it said.
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