Eskom’s new existential crisis is out of its control

Eskom’s rising municipal debt crisis is set to become existential for the utility, with CFO Calib Cassim forecasting unpaid bills worth R300 billion by 2030. 

What makes this even more challenging for Eskom is that the crisis appears to be out of its control, with the utility unable to engage in typical credit control practices given the essential service it provides. 

As a result, the utility is heavily dependent on the government, particularly the National Treasury, in finding a solution. 

So far, efforts from the National Treasury have been largely unsuccessful, with the rate of growth in debt owed to Eskom increasing in the 2025 financial year. 

Eskom CEO Dan Marokane told Newzroom Afrika that if this continues, the utility may have no choice but to ask the National Treasury for another taxpayer-funded bailout. 

Marokane explained that Eskom itself cannot draw a line in the sand and force an end to non-payment by municipalities, as this would crush the economy. 

In this sense, the municipal debt crisis has become too big for Eskom to handle through traditional methods, as an increasing number of municipalities and major metros slide further into debt. 

The debt municipalities owe the utility rose by 27% to R94.6 billion at the end of the 2025 financial year in March and amounted to R103.5 billion as of the end of August 2025.

Cassim said, without urgent intervention, municipal debt could exceed R300 billion by the end of the 2030 financial year – almost equivalent to the utility’s current debt burden.

“Let me tell you what drawing the line means. In any other business, you start exercising your credit control. In our case, this means we have to stop the supply of electricity,” Marokane explained. 

“If we stop the supply of electricity ourselves, for example, to the City of Johannesburg, the City of Tshwane, and the City of Ekurhuleni and other municipalities, they will be non-functional.” 

“So, our credit control options are not as available to us as they are to many other businesses.” 

Marokane warned that this rise in municipal debt owed to Eskom could result in the utility entering a financial crisis. 

Electricity Minister Kgosientsho Ramokgopa explained that these are unique circumstances for any company and said that Eskom cannot be treated as though it were an ordinary corporate. 

“I always make the point that if Eskom were a listed company, the chair and his board would have been dissolved and Mr Marokane would have been fired,” Ramokgopa said. 

“But, this is a different set of circumstances. The instruments that Mr Marokane can use to address the municipal debt problem only really exist in theory. In reality, they don’t exist.”

Solutions on the table 

The government, through the National Treasury, has tried to implement various strategies to tackle the rising municipal debt.

Despite these interventions, the growth in debt owed to Eskom has not slowed, with larger municipalities and metros falling into the non-paying category.

Cassim put it simply, saying that the National Treasury’s municipal debt relief programme has not been successful in stemming the escalating levels of debt. 

Marokane said there are multiple strategies the utility is now beginning to use to try to slow the growth in municipal debt and eventually reduce the amount owed to Eskom. 

“We have designed the distribution agency agreement, requiring collaboration between ourselves, National Treasury, and municipalities,” Marokane said. 

As part of this agreement, Eskom will work with municipalities to address the root cause of the problem, which is their inability to collect revenue efficiently. 

“We are in the last days of negotiating this agreement, and hopefully, in the next month, we can make some announcements so that we can start implementing it. The time to act is now,” Marokane said. 

This agreement aims to be a structural solution to the problem that gives municipalities the capacity to collect revenue from which it can then pay Eskom. 

“The amount is over R100 billion owed to Eskom, which is massive. This problem is now structural and can no longer be addressed by tackling issues in a few municipalities,” Ramokgopa said. 

“The fundamental problem is structural. The structural problem is the price of electricity, which has risen by 600% in the past decade.”

As a result of this rise, many South Africans cannot afford to purchase electricity through legitimate means, reducing revenue for municipalities, which can then not pay Eskom the full amount. 

“We have to find a way to make electricity more affordable to get South Africans to pay for it, without threatening the financial viability of Eskom and municipalities,” Ramokgopa said.

The minister previously pointed to the deterioration in capacity at municipalities as one of the major reasons for the growth in debt owed to Eskom. 

“This really has to do with the ills that have bedevilled municipalities. This includes the loss of skills, inability to plan, and a lack of technical expertise,” he said. 

Ramokgopa explained that the government is looking at ways to address this, with interventions bearing little fruit so far. 

“We need to get everything to work together, from improved infrastructure, improved skills, proper management, and create a culture of payment,” he said.

“It is a matter of affordability and technical skills at municipalities. This combination, in a stagnant economy, poses serious challenges.”