Eskom has warned it may act against bulk supply points as Johannesburg’s electricity debt escalates. Mayor Dada Morero responded during his State of the City Address (SOCA) on Wednesday.
Supply warning linked to Johannesburg’s Eskom debt pressure
While the City of Johannesburg deals with maintenance on ageing infrastructure, Eskom debt pressure is rising.
In a statement on Tuesday, Eskom said it “has been forced to issue a notice of its intention to reduce, interrupt and/or terminate” supply to the city. Johannesburg’s failure to honour payment agreements and repeated defaults are behind the threat.
The city’s outstanding balance includes arrears of more than R5.2 billion, and a current bill of almost R1.6 billion due on 5 June. Together, this brings Johannesburg’s debt to R6.8 billion.
Morero took the opportunity to tackle the issue during the city’s SOCA on Wednesday, saying the city is “concerned about Eskom’s notice” and takes it “seriously”.
“We will not fight Eskom. We will work with the minister of Electricity and Energy, the South African Local Government Association to resolve this particular challenge.”
He added: “ We are on track in ensuring that the city resolves the dispute with Eskom. Yes, City Power does have a turnaround plan which addresses this challenge.”
Loan to tackle Johannesburg’s electricity debt
Morero said part of the city’s “plan” is securing a loan.
“This resulted into agreements in principle with KfW, a German bank, to provide a loan of €200 million (over R3.8 billion) to fund energy related projects which align with the City Power ‘s project pipeline and infrastructure funding requirements.”
With billions already outstanding with Eskom, the city intends to take on additional debt of nearly R4 billion from KfW. The metro expects to receive the loan amount by the end of June.
Earlier in May, Finance Minister Enoch Godongwana met Morero to discuss concerns about the city’s finances.
National Treasury must intervene when risks to “fiscal sustainability and compliance with the legislative framework governing public finances” arise.
Godongwana added: “The mayor has agreed that he and his officials must go back and consider some serious remedial actions that will address the issues that we have raised.”
Morero said Johannesburg’s strategy to “stabilise” its finances involves selling vacant land in the debtors’ book valued at R23.2 billion.
With talks still underway, focus shifts to whether Johannesburg’s electricity revenue system can stabilise before the next escalation point.
Eskom’s financial position depends heavily on municipalities paying what they owe. That dependence continues to shift focus onto how electricity revenue is managed.
