In its latest statement issued on May 19, Eskom stated that the City of Johannesburg (CoJ) and City Power (CP) owe it about R5.26 billion in overdue debt.

It also mentioned that an additional R1.58b current account is due in June, bringing the total exposure to roughly R6.84b if unpaid. The utility warned that it may reduce or interrupt electricity supply to some Johannesburg bulk supply points because of the unpaid amount.

The statement said Eskom maintains that it is unacceptable for the city’s residents and South Africans at large that CoJ and CP continue collecting electricity revenue while failing to pay Eskom its share.

While Eskom continues to focus on cost efficiency, escalating municipal and metro arrear debt undermines these efforts.

Eskom’s financial sustainability and ability to supply electricity at affordable prices depend on improving its balance sheet by increasing revenue and reducing expenses. Revenue can only be increased through the collection of electricity debt and/or tariff increases.

Solution to help municipalities

Eskom offers a solution to help municipalities and metros deliver electricity in a more sustainable manner. Eskom has developed the Distribution Agency Agreement, a long-term, non-permanent contract between a municipality or metro and Eskom, as part of its active partnering initiative.

The agreement offers a suite of services and solutions aimed at restoring the sustainability of electricity provision in municipalities and metros by improving both technical and financial sustainability.

The services include skills development and training, the replacement or installation of smart meters, and revenue collection by Eskom on behalf of municipalities.

Eskom said it is working nationwide to assist with the rollout of the initiative.

‘We will not fight Eskom’

In his 2026 State of the City Address, Mayor Dada Morero said the city was concerned about Eskom’s latest notice and was taking the matter seriously.

“This challenge is not only affecting the City of Johannesburg but several municipalities across the country. We will not fight Eskom. We will work with the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, and the South African Local Government Association to resolve this challenge,” he said.

Mayor Morero noted that City Power has a turnaround plan that addresses the challenge. The plan includes establishing a unified management accountability structure, enhancing cash revenue, strengthening the relationship between service delivery and the City, and restructuring the institutional framework for optimal efficiency.

“Part of the solution is to implement guidance from the National Treasury and the Department of Cooperative Governance and Traditional Affairs to reform and strengthen Municipal Trading Entities.

This reform agenda will assist the city in improving governance, financial sustainability, operational efficiency and accountability within entities that have historically operated under significant fiscal and infrastructure pressure.

“Additionally, requests for proposals were issued to secure development finance institutions. This resulted in an agreement in principle with KFW, a German bank, to provide a loan of 200 million euros to fund energy-related projects aligned with City Power’s project pipeline and infrastructure funding requirements.

“The city, as the borrower, and City Power, as the executing agent, are finalising a contract with KFW, with the expectation that the agreed loan amount will be disbursed before the end of June.

“Over and above the turnaround plans, we are calling upon institutions such as the National Treasury, the Public Protector and the Special Investigating Unit to investigate the City’s finances,” explained Mayor Morero.

2025 agreement between Eskom and City Power

City Power and Eskom reached a R3.2b settlement after both parties avoided a lengthy court battle over electricity billing and debt dispute resolution. The settlement amount was set to be paid over four years.

The minister and the mayor led a high-level engagement to mediate between the parties, resulting in a jointly agreed technical intervention by the South African National Energy Development Institute to investigate and assess discrepancies related to the dispute.

The minister said the process highlighted the importance of intergovernmental relations, adding that the courts should be used as a last resort and should not be burdened with matters that can be resolved through engagement between the parties.

He further noted that another important lesson came from the scale of the exercise undertaken by City Power in Johannesburg, saying no other municipality or city in the country is larger than Johannesburg.

WATCH: City Power to pay Eskom R3.2b settlement

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