Eskom’s R98 Billion Municipal Debt Crisis Threatens Power Sector Stability

Johannesburg – September 2025

Eskom has reported its first profit in years, but the achievement is being overshadowed by a mounting municipal debt crisis, with unpaid electricity bills now standing at R98 billion — a 22% increase since 2023.

Electricity Minister Kgosientsho Ramokgopa described the ballooning arrears as a “structural crisis” that cannot be solved through accounting fixes alone, warning that it requires deep policy reforms.

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The Vicious Cycle of Non-Payment

Eskom’s debt problem is part of a broader vicious cycle undermining the national power system:

• Tariff Spiral: Electricity tariffs have increased by more than 600% over the past decade, making bills unaffordable for many households.
• Non-Payment Culture: According to Stats SA, only 41% of municipal customers are consistently paying their electricity bills.
• Service Collapse: Municipalities that default face threats of power disconnections, which further strangle local economies already under pressure.

This cycle, experts warn, risks destabilizing both Eskom’s finances and the municipalities that depend on its power supply.

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South Africa’s Top Municipal Debtors

As of July 2025, the five municipalities with the largest outstanding debts are:

1. Ekurhuleni – R14.2 billion
2. Johannesburg – R12.8 billion
3. eThekwini – R9.5 billion
4. Emfuleni – R7.1 billion
5. Mangaung – R6.3 billion

Collectively, these metros account for a significant portion of the national arrears and highlight how urban centers are struggling just as much as smaller municipalities.

Solutions on the Table

Government and energy officials are exploring a range of possible solutions to break the deadlock:

• Direct Federal Collection: Eskom could bypass municipalities and bill consumers directly, removing the middleman.
• Debt-for-Reform Swaps: Conditional bailouts from the National Treasury tied to strict reforms in financial management.
• Cross-Subsidization: Wealthier customers and businesses would shoulder higher costs to help fund infrastructure in struggling townships.

While each proposal has political and economic risks, experts agree that inaction is no longer an option.

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The Road Ahead

With Eskom under pressure to maintain grid stability and expand renewable energy access, the municipal debt quagmire threatens to undermine progress.

Ramokgopa has urged swift action:

“We cannot continue with a system where municipalities collect money but fail to pass it on. This is a structural problem, not a cash-flow issue.”

As policymakers weigh their options, the outcome of this debate could reshape how electricity is billed, collected, and financed in South Africa for decades to come.