Morero outlines plan to tackle Eskom debt and restore Joburg’s finances

City of Johannesburg Mayor Dada Morero has set out measures to address the city’s mounting debts, saying the municipality will repay Eskom and settle other outstanding obligations as part of efforts to restore financial stability.

Plans to repay Eskom and clear arrears

At a media briefing on Wednesday, Morero said the city will be paying Eskom just around R1.4 billion as soon as we receive the cash, adding that this payment will set us free from the debt process that we agreed with Eskom. He defended the municipality’s decision to borrow from an external lender, saying the funding is essential to address the city’s financial and service-delivery challenges.

Loan from KfW and engagement with national structures

Morero confirmed the City of Johannesburg secured a R3.8 billion loan from German state-owned development bank KfW and said the city is borrowing responsibly. He described ongoing discussions with National Treasury and said engagement with the Presidential Financial Working Group has been an important step toward stabilising the city’s fiscal situation.

Morero noted a recent meeting with the Finance Minister in which they mapped out a process of managing issues of concern, and referenced the decision to invoke Section 216 of the Constitution of the Republic.

Fiscal pressure from Treasury and earlier disputes

The mayor’s update comes after National Treasury temporarily withheld R13.5 billion in equitable share allocations to municipalities nationwide, R3.6 billion of which affects the City of Johannesburg. Morero has also faced criticism from Finance Minister Enoch Godongwana over a R10.3 billion wage agreement with municipal workers; the minister in May threatened to cut financial support unless the agreement was rescinded.

Other creditors and service disruptions

On water services, Morero said the city does not have any issues with Rand Water and that we will be paying them an amount of about R960 million.

Morero addressed the closure of the Thuso House client service centre, saying the shutdown should never have happened. He said the reported R3.4 million debt that led to the sheriff of the court attaching city assets was primarily caused by internal failures, with officials not doing their jobs. He described the matter as one that could have been closed earlier but for delays related to a court order.

Background: Eskom and City Power arrears

Morero’s reassurances follow a period in which Eskom threatened to cut power to the city over unpaid bills totalling R6.8 billion owed by the City of Johannesburg and its utility, City Power.

The mayor said he is confident the combined steps the loan, targeted payments and continued engagement with Treasury and the Presidential Financial Working Group will help stabilise the city’s finances.

“A few weeks ago, we met with the Minister of Finance, and we mapped out a process of managing issues of concern. It is against this backdrop that we note the decision to invoke Section 216 of the Constitution of the Republic,”

Morero also said:

“We will be paying Eskom just around R1.4 billion as soon as we receive the cash, which will set us free from the debt process that we agreed with Eskom.”