Eskom’s R95 billion threat

The billions that South African municipalities owe Eskom are hindering the state-owned power utility’s plan to restructure and separate its distribution unit, according to Chairman Mteto Nyati.

South Africa’s municipalities owed Eskom R95.4 billion by November as they struggle to collect revenue from customers, and available funds are sometimes misappropriated after years of mismanagement. 

Eskom completed the unbundling of its transmission business last year, a major step in the process of restructuring and splitting the utility into three units. That means the focus now turns to the separation of the distribution arm. 

“The municipal-debt challenge has the potential to jeopardize the distribution separation as well as threaten the financial viability and sustainability of the future distribution industry,” Nyati said in Eskom’s 2024 annual report.

The National Treasury in 2023 announced a debt-relief program to write off Eskom’s debt, provided municipalities adhere to set conditions.

The uptake on that has been slow and many councils fail to enforce the required credit controls.

“The board is concerned about the lack of compliance with the municipal debt-relief program, given that the conditions of the program prohibit Eskom from pursuing action against non-compliant municipalities,” Nyati said.

Eskom has asked the National Treasury to engage directly with non-compliant municipalities to address the issue the issue of non-payment or late payments, CFO Calib Cassim said in the report.