South Africa’s richest city promises to pay Eskom with money it doesn’t have

Johannesburg Executive Mayor Dada Morero promised to clear significant portions of the city’s debts to both Eskom and Rand Water within the next week, with money it does not currently have.

Morero addressed the media on 8 July 2026, responding to the National Treasury’s decision to withhold R3.6 billion in equitable share funding to the city.

As part of his address, Morero provided updates on the progress being made towards tackling some of the financial issues currently facing Johannesburg.

This included the outstanding debts which the city owes to Eskom and Rand Water, which Morero said would be covered once the equitable share had been released.

Morero said Eskom would receive approximately R1.4 billion, while Rand Water would receive around R960 million this month, as soon as the Treasury has released the funding.

“Rand Water and Eskom will receive their funds by mid July,” Morero said. “As the equitable share will then come into the city, we confirm that we will be paying Eskom and Rand Water.”

The National Treasury has so far not disclosed when, or even if, it will eventually lift the sanction on Johannesburg’s portion of the equitable share.

Instead, it simply explained that it would release funding to affected municipalities only after they had submitted an approved payment plan for paying off their debts.

This course of action has been described by the Treasury as being a “corrective rather than punitive measure”, as it is intended to instil stronger fiscal discipline across municipalities.

Additionally, the Treasury said the move will likely not significantly impact service delivery, as the embargo is expected to be in place only in the short term.

National Treasury Deputy Director-General for Intergovernmental Relations, Ogalaletseng Gaarekwe, said only a portion of the share will be released upon submission of a payment plan.

“This time last year, we had withheld for 75 municipalities,” Gaarekwe said. “By early August, we had already released the money for everyone.”

“It depends how fast the municipalities sort out and send us those payment plans. Once the portions are released, they pay creditors. Once they have done that, we release the whole amount.”

City must prove it can deliver

While Morero’s commitment to paying off Johannesburg’s debts sounds reassuring, some remain skeptical if the city can actually put this into motion.

The Organisation Undoing Tax Abuse (OUTA) said it remains unconvinced when similar promises had been made before but did not bear any fruit.

Additionally, the organisation said it is highly concerned regarding Johannesburg’s heavy reliance on the release of the withheld equitable share in order to settle its outstanding debts.

“Sustainable financial recovery will require far more than an injection of cash and additional loans, which will plunge the city into a deeper debt crisis,” OUTA said.

“It demands structural reforms to revenue collection, expenditure controls, procurement oversight, contract management, maintenance planning and transparent financial reporting.”

Johannesburg reportedly owes approximately R1.2 billion to Rand Water and over R5 billion to Eskom in arrears debt, more than what it would receive from the equitable share.

Eskom has threatened to cut power to parts of the city if an agreement to settle this debt is not reached before 24 July, merely a week or so after Morero promised Eskom would be paid.

This means that if the equitable share funding has not been released before then and the payment is missed, then the power utility may begin suspending electricity supply to Johannesburg.

And while a payment deal between the two parties was reportedly reached, the details of this are not publicly known and City Power failed to honour its payment obligations according to Eskom.

Morero assured residents and the media, however, that the city is fully compliant with the Treasury’s requirements and that its revised budget has now been deemed fully funded.

OUTA CEO Wayne Duvenage questioned the veracity of this statement and said the Treasury was more than within its rights to continue withholding the funding.

“Johannesburg has reached the point where transparency, decisive leadership and real consequence management are no longer optional,” Duvenage said.

“They are essential if the city is to regain the confidence of residents, investors, creditors and National Treasury.”