KEY POINTS
- Municipalities owe Eskom R120.26bn in overdue debt.
- Debt could reach R358bn by 2031 without intervention.
- Only 10 of 71 debt-relief municipalities are fully compliant.
Municipal debt owed to Eskom could surge to R358 billion by 2031 if urgent measures are not taken to address persistent payment failures, Electricity and Energy Minister Kgosientsho Ramokgopa has warned.
Municipalities currently owe Eskom R120.26 billion in overdue debt, with 83 municipalities facing the utility’s formal debt-recovery processes.
Ramokgopa warned that the growing arrears pose a serious threat to Eskom’s financial sustainability, particularly as municipalities continue to struggle to settle their electricity accounts.
“Municipal debt remains the single greatest threat to Eskom’s financial sustainability,” Ramokgopa said.
According to Eskom’s projections, the debt could rise to R358 billion by the 2031 financial year if decisive intervention is not implemented.
The warning comes despite the government’s Municipal Debt Relief Programme, introduced in 2023 to help municipalities manage their outstanding Eskom obligations.
The programme has faced compliance challenges. Finance Minister Enoch Godongwana previously disclosed that 50 of the 71 municipalities enrolled in the programme had failed to pay their current Eskom accounts as required.
The affected municipalities had accumulated a combined R40.5 billion in debt linked to the programme.
Eskom said only 10 of the 71 municipalities participating in the programme were fully complying with the requirement to settle their current accounts in full every month.
Eskom records growing revenue pressure
The utility said persistent non-payment by municipal, metropolitan and residential customers continued to weigh on its financial performance.
In its financial results for the year ended March 2026, Eskom reported that R15.8 billion, equivalent to about 4.5% of revenue, was not recognised as revenue because of the elevated risk that the money would not be collected.
That figure increased from R11.9 billion in the previous financial year.
The growing municipal arrears therefore remain a significant challenge as Eskom works to improve its financial position and maintain reliable electricity supply. Eskom has introduced several measures aimed at improving municipal payments, strengthening revenue collection and preventing additional debt from accumulating.
These include Distribution Agency Agreements, payment arrangements and targeted debt concessions, alongside closer cooperation with National Treasury through the Municipal Debt Relief Programme.
Under Distribution Agency Agreements, Eskom can take responsibility for billing and revenue collection in some defaulting municipalities while also providing technical support to improve electricity operations.
Ramokgopa said decisive action would be needed to prevent municipal debt from escalating to the projected R358 billion level.
