{"id":854286,"date":"2026-03-18T10:58:33","date_gmt":"2026-03-18T08:58:33","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=854286"},"modified":"2026-03-18T10:58:33","modified_gmt":"2026-03-18T08:58:33","slug":"eskom-warns-its-r110-billion-headache-could-reach-r300-billion-in-5-years","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/854286\/eskom-warns-its-r110-billion-headache-could-reach-r300-billion-in-5-years\/","title":{"rendered":"Eskom warns its R110 billion headache could reach R300 billion in 5 years"},"content":{"rendered":"\n

Eskom has seen its pre-tax profit grow, but has warned that municipal debt could reach over R300 billion if left unchecked. <\/p>\n\n\n\n

In its FY26 Q3 Business Performance Report to parliament, Eskom said that its performance from Q2 to Q3 improved. <\/p>\n\n\n\n

The state-owned entity said that financial metrics remained on target, supported by improved operations performance. <\/p>\n\n\n\n

Q3 year-to-date total revenue of R273.7bn was 3.4% better year-on-year. It was mainly due to a tariff increase, as local sales were 5.7% lower and cross-border sales 5.6% lower year-on-year. <\/p>\n\n\n\n

The group’s year-to-date profit is up 2.1% year-on-year to R34.9 billion. Year-end profit is expected to be 7.9% higher year-on-year. <\/p>\n\n\n\n

The group’s primary energy cost was below budget, as the Open-Cycle Gas Turbine cost was down 25% year-on-year and coal usage was 7% below budget. <\/p>\n\n\n\n

Debt securities and borrowings also declined to R359.6 billion from R410 billion in the prior year, and liquidity and cash position strengthened.<\/p>\n\n\n\n

However, the group admitted that growing municipal debt remains a concern. The group saw year-to-date municipal debt growth of R15.9 billion. <\/p>\n\n\n\n

Metros contributed R2.3 billion to the debt growth, and non-metros added R13.6 billion. This brought the total municipal debt to R110.5 billion. <\/p>\n\n\n\n

“A coordinated effort is required to arrest municipal debt growth, which poses a risk to the electricity distribution industry,” said the SOE. <\/p>\n\n\n\n

Eskom said that municipal debt could balloon to R116.2 billion by the end of the 2026 financial year, which would mark a year-on-year increase of 23% from the 2025 financial year. <\/p>\n\n\n\n

It added that municipal debt could grow to over R300 billion by FY2031 if it remains unabated. <\/strong><\/p>\n\n\n\n

Eskom said that 71 municipalities are on the National Treasury’s debt relief programme, with 10 municipalities compliant with their current account payments. <\/p>\n\n\n\n

Eskom and the government are thus working on alternative solutions, such as distribution agency agreements (DAAs). <\/p>\n\n\n\n

“DAAs will help support municipalities achieve sustainable local service delivery, while also supporting Eskom\u2019s financial stability through improved billing and revenue collection,” it said.<\/p>\n\n\n\n

DAAs see the licence remaining with the municipality, but would see Eskom manage services. Eskom aims to sign 14 DAAs by 31 March 2026. <\/p>\n\n\n

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Eskom lays down the hammer <\/h2>\n\n\n\n

The municipal debt problem has become so large that Eskom started issuing notices to municipalities earlier this month<\/a>, where they must make representations over why their supply should not be cut. <\/p>\n\n\n\n

Eskom said that it had exhausted all reasonable avenues through the Intergovernmental Relations Framework Act, with around 14 municipalities at risk of having their power cut. <\/p>\n\n\n\n

Affected parties have been given the opportunity to make representations before further action is considered, as per the Promotion of Administrative Justice Act (PAJA).<\/p>\n\n\n\n

The municipalities have been selected because they have either:<\/p>\n\n\n\n