In a significant escalation of financial tensions, Eskom has issued a formal notice of its intention to reduce, interrupt, or terminate electricity supply to specific bulk supply points within the City of Johannesburg and City Power. This drastic measure comes as the arrear debt owed by the municipality has surged to a staggering R5.2 billion.
The power utility emphasised that this decision follows more than two years of unsuccessful attempts to support the metro in meeting its financial obligations and honouring its Electricity Supply Agreement.
The financial breakdown provided by Eskom indicates that the City of Johannesburg and City Power owe an exact arrear debt of R5,255,421,994.16. This figure does not include the current account, where an additional R1,582,093,993.32 is expected to fall due by 5 June 2026.
Eskom characterised the situation as unsustainable, noting that while the City continues to collect electricity revenue from its residents, it has repeatedly defaulted on paying over the portion legally owed to the nationality utility.
Impact on financial sustainability and tariffs
Eskom highlighted that its own ability to provide affordable electricity and maintain operational efficiency is directly undermined by escalating municipal debt. The utility clarified that its balance sheet can only be stabilised through two primary avenues: the effective collection of debts or the increase of electricity tariffs. By allowing municipal arrears to grow unchecked, the financial burden is essentially shifted, threatening the long-term sustainability of power provision for all South Africans.
Potential solutions through distribution agency agreements
Despite the looming threat of power interruptions, Eskom is promoting a collaborative recovery path known as the Distribution Agency Agreement. This initiative, part of a broader Active Partnering strategy, is a long-term but non-permanent contract designed to restore technical and financial health to struggling municipalities. The agreement includes provisions for skill development, the installation of smart meters, and a system where Eskom collects revenue on behalf of the municipality to ensure all parties are paid fairly and on time.
While the situation with the City of Johannesburg remains critical, Eskom noted that other regions are beginning to adopt this model. As of early May, nine municipalities have already passed council resolutions to sign these agreements. For Johannesburg, the adoption of such a framework could be the key to avoiding the planned service terminations and stabilising the local energy grid.