Eskom threatens to cut off Johannesburg

Eskom has issued a notice of its intention to reduce, interrupt, and/or terminate the supply of electricity to certain supply points in the City of Johannesburg. 

This comes as the arrears owed by the city and its utility, City Power, to Eskom reach R5.2 billion. The amount excludes its current account, which has a further R1.58 billion in arrears. 

Eskom explained in a media statement that this notice follows two years of work with the city to support it in meeting its payment obligations. 

The utility said this comes as a result of the City’s continued failure to honour its Electricity Supply Agreement with Eskom, which includes repeated defaults. 

“Eskom has been forced to issue a notice of its intention to reduce, interrupt and/or terminate the supply of electricity to certain bulk supply points against the City of Johannesburg and City Power,” Eskom said. 

“Eskom maintains it simply cannot be acceptable to the City’s residents and all South Africans that COJ/CP is collecting electricity revenue but failing to pay over Eskom’s share.” 

The utility said that while it continues to focus on being cost-efficient, escalating municipal and metro arrear debt undermines these efforts. 

“Eskom’s financial sustainability and ability to supply electricity at affordable prices depend on its ability to improve its balance sheet by increasing revenue and reducing expenses,” it said. 

Eskom explained that its revenue can only be increased by collecting electricity debts and by increasing electricity tariffs. 

If the utility is able to recover more revenue through improved compliance, then Eskom can avoid increasing electricity as steeply as it has over the past decade. 

The crackdown on Johannesburg is part of Eskom’s broader efforts to tackle the rising municipal debt owed to it for supplying electricity. 

It explained that many municipalities and metros are working with Eskom to develop sustainable debt solutions, and the utility will accelerate its support for this approach. 

Eskom announced on 5 May that nine municipalities have received council resolutions to sign Distribution Agency Agreements following consultation processes.

This comes after the utility developed the Distribution Agency Agreement, which is a long-term contract between a municipality and Eskom to improve revenue collection. 

The agreement offers a suite of services and solutions aimed at restoring the sustainability of electricity provision in a municipality or metro by enhancing its technical and financial sustainability. 

These services include skill development and training, replacement or installation of smart meters, as well as Eskom collecting revenue on behalf of the municipality.