The one province that owes Eskom R29.4 billion 

Municipalities in Gauteng owe Eskom R29.4 billion, the largest amount owed to the utility by any province, as mismanagement plagues South Africa’s economic hub. 

Co-operative Governance and Traditional Affairs Minister Velenkosini Hlabisa revealed this in a written reply to a parliamentary question in late December. 

According to data from Hlabisa’s department, municipalities and metros owe Eskom R109.4 billion. 

Hlabisa revealed that, of this debt, R15.6 billion was current, R8.7 billion was outstanding for 31 to 60 days, R8 billion for 61 to 90 days and R77 billion for 90 days and more. 

He also gave a municipal and metropolitan breakdown of the debt, showing that Gauteng’s municipalities owe the most at R29.4 billion. 

Free State municipalities owe R25 billion, Mpumalanga R24.7 billion, the North West R8.2 billion, the Northern Cape R5.5 billion, the Eastern Cape R5.4 billion, KwaZulu-Natal R4.9 billion, the Western Cape R2.3 billion, and Limpopo R2 billion. 

Eskom CFO Calib Cassim previously said that municipal debt owed to Eskom is on track to hit R200 billion in 2028 and is growing at an annual rate of R20 billion. 

The utility’s latest annual financial statements, released in December, reported a R55 billion after-tax loss due to an accounting adjustment and increased diesel expenditures in 2023. 

The once-off adjustment was to derecognise a deferred tax asset of R36.6 billion in terms of IFRS Accounting Standards stemming from the transfer of Eskom’s Transmission Division to the National Transmission Company South Africa. 

Cassim was upbeat about Eskom’s financial future, noting that its operating profit skyrocketed by 288% to R10.2 billion. 

The utility also forecasted a profit of around R10 billion for the current financial year ending 31 March 2025, as its operating performance has greatly improved. 

Cassim said the utility’s ability to keep load-shedding at bay will directly translate into a much improved financial performance. 

So far, Eskom has realised savings of over R10 billion from the reduced use of diesel to run its open-cycle gas turbines (OCGTs) to stave off load-shedding in the first few months of the 2025 financial year compared to the previous period. 

Eskom’s board is setting a target of R16.2 billion in cost-saving measures for the 2025 financial year. 

However, Cassim explained that the municipal debt owed to the utility threatens Eskom’s forecasted profit and financial stability. 

During the presentation of Eskom’s results, Cassim and CEO Dan Marokane made it clear that the municipal debt relief programme was not delivering the intended results. 

In 2018, debt owed to Eskom stood at a mere R13.6 billion. In the first five months of its current financial year, over R12 billion has been added to the bill. 

“If the growth of municipal debt is not addressed, the R254 billion debt relief from the government will effectively be null and void,” Cassim said. 

“This does not help Eskom’s financial sustainability going forward. After this debt relief plan, we do not want to rely on the fiscus anymore.” 

Eskom’s group executive for distribution, Monde Bala, explained the phenomenon of non-payment in a presentation to Parliament in December. 

Bala explained that NERSA allocates distribution licences to municipalities and to Eskom. Municipalities that do their own distribution take bulk services from Eskom and are expected to pay for that service. 

“What has happened in the last decade is that we started seeing a phenomenon where municipalities just either short-paid or not paid at all,” he said. 

“Now the situation has been exacerbated in the last year or year and a half by the bigger metros joining in this practice of either short-paying or not paying at all.”

Bala also revealed to Parliament that South Africa’s richest city, Johannesburg, had not settled its debt owed to Eskom in full after a payment plan was negotiated. 

This followed Eskom’s publicly stated intention to interrupt the supply of electricity to Johannesburg in November 2024, pending the payment of its debt. 

With the intervention of the energy and electricity minister, Dr Kgosientsho Ramokgopa, the City of Johannesburg and Eskom began a process aimed at resolving the dispute. 

As part of that agreement, the City of Johannesburg and City Power agreed to settle their R1.4-billion current account with Eskom.

“No. They did not pay when they were supposed to pay the R1.4 billion,” Bala told Parliament. 

“They subsequently paid, I think, on the last day of November, they paid about R999 million of that R1.4 billion with a promise to pay the other R400 million on the 2nd of December.”

“On the 2nd of December, they only paid R322 million and not the full R400 million so either way, I think there is a problem.”