Johannesburg Risks Power Cuts as Eskom Revives R6.3 Billion Debt Threat

Parts of Johannesburg — South Africa’s wealthiest city — could face power cuts as a long-standing dispute between the City of Johannesburg and Eskom resurfaces, with the national power utility threatening to disconnect supply due to unpaid bills.

Chris Yelland, respected energy analyst and director of EE Business Intelligence, has confirmed that tensions between the City and Eskom have reignited after months of uncertainty. The standoff stems from a massive R6.3 billion debt, which includes R4.9 billion in arrears and R1.4 billion in current charges.

Power Cut Warnings Resurface

In November 2024, Eskom issued a formal notice warning of potential supply interruptions if the City failed to settle its bill. City Power, Johannesburg’s municipal electricity distributor, responded by disputing the charges — accusing Eskom of overbilling by over R3.4 billion.

The Department of Electricity and Energy stepped in, appointing the South African National Energy Development Institute (SANEDI) to conduct an independent review. Though the report was expected by late November 2024, it was only submitted to Minister Kgosientsho Ramokgopa in March 2025 — four months late.

Sources close to the process suggest the report supports Eskom’s position, pointing more to Johannesburg’s poor financial health than billing errors. “City Power and City of Johannesburg have not paid and will not pay,” Yelland was told by an insider. “We are back where we started.”

Eskom’s Bigger Problem: R100 Billion in Municipal Debt

Eskom has repeatedly warned that unpaid bills from municipalities are crippling its operations. Municipal arrears have ballooned to over R100 billion — with Johannesburg among the top contributors. At the end of 2024, Eskom had already named areas like the CBD, Midrand, and Cresta as targets for possible blackouts.

This unresolved conflict is now raising alarm for businesses and households alike in Johannesburg — South Africa’s economic engine. Power cuts could cause major disruptions in a city that drives national GDP growth.

Eskom Wants Control of Defaulting Municipalities

In a dramatic shift, Eskom CEO Dan Marokane has called for the National Treasury to allow Eskom to take over electricity services in defaulting municipalities. This move would allow the utility to bypass local governments, assuming control of metering, billing, and revenue collection.

Marokane warned that municipal debt has risen 33% year-on-year, threatening to wipe out the gains made by the government’s R254 billion Eskom debt relief package.

Under the proposed “distribution agency agreements,” Eskom would manage electricity infrastructure and billing, while municipalities retain tariff-setting powers. Importantly, government subsidies for free basic electricity would go directly to Eskom — instead of municipal coffers where funds are often misused.

Municipal Compliance Failing

The Treasury’s 2023 debt relief programme — designed to clear municipal arrears over three years — is faltering. Of the 71 municipalities enrolled, only 16 met the compliance criteria by February 2025. Eskom says many treated the programme as a payment holiday, and even larger metros are beginning to default.

Eskom plans to target the 14 worst-performing municipalities, which account for nearly 60% of total arrears. Marokane warned that without stronger Treasury enforcement, “talking won’t fix this crisis.”

What’s Next for Johannesburg?

With the SANEDI report now in the hands of government, and signs pointing in Eskom’s favour, the clock is ticking for Johannesburg. If the City fails to act — and settle its R6.3 billion debt — power cuts could become a harsh reality.

For now, businesses, residents, and investors wait anxiously as the country’s energy saga continues — with its richest city once again caught in the middle.

{Source: BusinessTech}

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