Eskom throws South Africa’s richest city a lifeline

A protracted electricity billing and debt dispute between power utility Eskom and Johannesburg’s City Power, spanning over a decade and involving tens of millions of rand, has been resolved.

Eskom and Joburg have reached a payment agreement, which will see Joburg’s City Power, paying the national utility R3.2 billion over the next four years.

In return, Eskom will write off R830 million in penalties and related costs.

The resolution, mediated by the South African National Energy Development Institute (Sanedi), was announced during a media briefing by the Minister of Electricity and Energy, Kgosientsho Ramokgopa, accompanied by Johannesburg Mayor Dada Morero.

The finalised settlement includes several key concessions:

• Payment Plan: City Power will pay R3.2 billion to Eskom over a four-year period.
• Debt Write-off: Eskom has written off R830 million. This amount results from:
  • Removing interest on the owed amount.
  • Concessions regarding load shedding estimations, where “City Power was correct to say that during periods of load sharing, some of these issues were not accounted for.”
  • Removing penalties related to notifiable maximum demand.

The Minister acknowledged the complexity of the matter, noting that the amounts involved run into tens of millions of rand and, if left unresolved, could have threatened the financial sustainability of both City Power and Eskom over time.

In November 2024, Eskom issued a notice of intention to interrupt power supply to Johannesburg, citing an outstanding debt of R4.9 billion in arrears, and an additional R1.4 billion in current charges.

The mediation process, initiated in November of last year, involved Sanedi as a “technically competent party but also a neutral party.”

Initially, a three-week timeline was set for the investigation, focusing on “issues of billing and metering.” However, the process extended to seven months.

With a financial burden of high winter tariffs on households and industries, there will be relief during the winter periods regarding the payment of that R3.2 billion, with City Power paying the amount outside the winter period.

Ramokgopa said that courts should be seen as a “forum of of last resort” for technical matters.

He added that this serves as a “template” for other municipalities facing similar billing disputes with Eskom.

The Minister said the resolution of the dispute between the two entities can be used as a template for other struggling municipalities.

“We are excited about this development. We also have something similar in Tshwane and as and when municipalities come forward, we will have these discussions on how best to provide a degree of relief.”

“There must be a case that is presented, accepting that Eskom has also got its obligations…they need to collect because they generate electricity.”

“That costs money and they must recover that money from the end user to reinvest it back into their asset base and into the generation of electricity,” said Ramogkopa.

Morero thanked the minister for his role in reaching the agreement, which both City Power and Eskom have welcomed.

City Power is expected to continue paying its current account, and the agreement now serves as a model for similar arrangements with other municipalities.