'Municipal debt remains the single greatest threat to Eskom's financial sustainability.'
Minister of Electricity and Energy Dr Kgosientsho Ramokgopa warns municipal debt could balloon significantly if decisive interventions are not implemented, however, he makes mention of measures that have been in place for a while and have yielded limited success. Picture: Gallo Images/Volksblad/Mlungisi Louw
Minister of Electricity and Energy Dr Kgosientsho Ramokgopa warned that municipal debt to Eskom could reach R358 billion by the 2031 financial year if decisive intervention is not implemented.
He said it is encouraging that the City of Johannesburg has paid its arrears in full.
“As at 31 July 2026, total overdue municipal debt amounted to R120.26 billion. Municipal debt remains the single greatest threat to Eskom’s financial sustainability,” said the minister.
Interventions to recover debt
IFP MP Nompumelelo Happiness Mhlongo asked the minister what interventions are in place to ensure municipalities successfully recover overdue debt. Most of the measures the minister mentioned have been in place for some time, but have yielded limited success.
After the City of Johannesburg’s payment, Ramokgopa said 83 municipalities remained subject to Eskom’s formal debt-recovery processes. Of these, 71 participated in the National Treasury’s Municipal Debt Relief Programme.
“Eskom is implementing a range of measures to improve municipal payment performance, address revenue-collection shortfalls, and limit further debt accumulation.”
Improvement of debt collection
One measure the minister mentioned is the Distribution Agency Agreements, under which Eskom partners with defaulting municipalities to strengthen electricity operations, improve operational efficiency, and enhance revenue collection.
“Eskom provides technical teams to transfer skills and build municipal capability, while the municipality’s electricity business is ring-fenced, and its billing and revenue collection are managed by Eskom. These are temporary agreements, with the distribution licence remaining with the holder.”
The second measure he mentioned is collaboration with the National Treasury. “Eskom continues to work with the National Treasury to support municipalities, including through the Municipal Debt Relief Programme,” said Ramokgopa.
“The programme has achieved limited success, with only 10 of the 71 participating municipalities fully complying with the National Treasury’s key condition that current accounts be settled in full each month.”
Assisting municipalities with payment challenges
Ramokgopa said that over the years, Eskom has granted various concessions and implemented targeted interventions to help municipalities address payment challenges, including extended payment terms, the ring-fencing of debt with interest suppression and reversals, and the write-off of debt subject to compliance with the National Treasury’s Debt Relief Programme.
“Eskom applies credit- management processes, engages through intergovernmental-relations structures, and offers payment arrangements. These measures have contributed to improved payment performance among metropolitan municipalities and certain other municipalities,” he added.
“Eskom manages the Notified Maximum Demand of defaulting municipalities to help reduce their electricity bills. Where necessary, Eskom considers legal action, limits supply to a level aligned with the municipality’s affordability, or disconnects supply as a measure of last resort.”
