Gordhan said the Mpumalanga municipality had for years had a shortfall on projected electricity revenue because its tariffs were not cost reflective.
“While in the previous years the municipality succeeded in paying Eskom accounts from accrued surpluses, during the later stages of 2012 and the beginning of 2012, a cash shortfall in the municipality resulted in under payments of the account,” he said in a written response to a parliamentary question posed by the Democratic Alliance.
Moreover, the minister said, Emalahleni was experiencing electricity losses of more than R200 million due to illegal connections, high maintenance cost to its ageing power infrastructure and “constant vandalism of electricity power lines, copper theft, etc”.
These costs could not be recovered from tariff revenue, Gordhan added.
Eskom is owed about R2.82 billion by 51 municipalities across South Africa as of 31 May 2014.
Emalahleni, which has been under administration for more than a year, is the worst offender, followed by Thaba Chweu, also in Mpumalanga.
Gordhan said Emalahleni has signed acknowledgement of debt and payment plans with Eskom and established a law enforcement unit to combat vandalism and remove illegal power connections.