City of Joburg agrees to pay Eskom R1.4bn to avoid power being cut off

The City of Joburg has agreed to pay R1.4 billion of its outstanding bill to Eskom by the end of November, Electricity and Energy Minister Kgosientsho Ramokgopa has announced.

Ramokgopa met with City of Joburg officials on Monday to address tensions between the metropolitan municipality and Eskom following a public dispute.

City of Joburg-Eskom dispute

Last week, Eskom issued a warning that it may cut Johannesburg’s electricity supply if the city fails to settle its debt to the utility.

The City of Joburg and its entity, City Power, currently owe R4.9 billion in unpaid bills, according to Eskom.

Additionally, Eskom noted an upcoming charge of R1.4 billion due at the end of November 2024, which will bring the city’s total outstanding balance to R6.3 billion.

The city, however, has alleged that Eskom has been overbilling it.

Eskom municipal debt

Speaking during a media briefing on Monday, Ramokgopa revealed that municipal debt has surged from R78 billion in July to R90 billion over the past three months.

The minister attributed this rise to economic underperformance, a loss of skilled personnel at the local government level, issues with accurate billing, and ineffective credit control measures — all of which have led to a “significant contraction” in the revenue base for municipalities.

“So essentially, we are seeing an average increase of debt owed to Eskom of about R3 billion per month,” Ramokgopa said on Monday.

ALSO READ: Eskom ‘not to blame’ for Joburg’s electricity debt crisis – Outa

He expressed concern over the rising municipal debt, noting its impact on electricity tariffs.

Ramokgopa highlighted that part of the debt was due to households, including those financially able, not prioritising payments to municipalities.

This shortfall undermined municipalities’ ability to meet their obligations for bulk electricity supply.

“All other municipalities are faced with the same situation. The challenge with Johannesburg is that it is the biggest of all these entities so if Johannesburg fails, the economy will fail.

“So we think that from the Johannesburg solution, we will find a template that can be exported to other parts of the country,” he said.

MINISTER OF ELECTRICITY AND ENERGY ENGAGES WITH CITY OF JOHANNESBURG EXECUTIVE MAYOR AND CITY POWER EXECUTIVES ON ELECTRICITY DEBT AND SUPPLY ISSUES https://t.co/ueMEQ2JIVm

— @CityPowerJhb (@CityPowerJhb) November 11, 2024

Loading shedding impact on municipalities

Ramokgopa indicated that Eskom has engaged with the South African Local Government Association (Salga) and some municipalities about the rising municipal debt

“We are trying to move with speed to ensure that we avert a catastrophe and that catastrophe is a situation where the levels of debt continue to escalate exponentially undermining Eskom’s ability to meet its obligations.”

READ MORE: Eskom’s threat to cut power in Gauteng ‘raises questions about fairness’

He added that load shedding had legacy implications on municipalities.

“Here in Johannesburg, City Power has been underbilled by about R5 billion as a result of load shedding and, therefore, they have been doing catch-up over a period of time,” Ramokgopa said.

“The City of Johannesburg [and] City Power is faced with a number of objective challenges that require attention.”

City of Joburg to pay Eskom

Ramokgopa explained that the billing dispute between Eskom and the City of Johannesburg dates back to 2019, but intensified last year when the city started defaulting on payments, ultimately bringing the matter to court.

“There’s no need at this point to invite the courts to come and mediate. We think that it’s an unfortunate step and I’m sure that going forward it’s something that we would want to rectify.”

The minister stated that Monday’s discussions led to an agreement in which City Power committed to paying R1.4 billion. Eskom will withdraw its notice to interrupt power supply once the city has paid this amount.

READ MORE: Prepaid electricity meters must still be upgraded by 24 November, says City Power

“We have agreed that City Power will pay the current account,” the minister said.

He cautioned that the dispute over Eskom’s billing accuracy remains unresolved, but expressed confidence that a solution would be reached through continued discussions.

“It can’t be the case, as it is alleged here, that there’s an overbilling on the part of Eskom and City Power sees itself as a casualty. That situation needs to be rectified.”

Watch the full briefing below, courtesy of SABC: