KEY POINTS
- Emfuleni wants Treasury to cancel another R2 billion of its Eskom debt.
- Municipality says it complies with conditions for debt relief after last year’s write-off.
- Eskom still faces R70 billion in arrears from municipalities across South Africa.
South Africa’s heavily indebted Emfuleni Municipality is pressing the National Treasury to cancel another portion of its ballooning electricity arrears owed to Eskom, less than a year after securing a multibillion-rand reprieve.
The municipality, which sits in Gauteng and has long struggled with service delivery failures and financial mismanagement, is battling to settle a debt pile that once stood at R8 billion. In 2024, Treasury approved a request to wipe off nearly R2 billion, giving the local authority some breathing room after years of defaulting on its obligations to the state-owned power utility.
Now, Emfuleni says it qualifies for a second round of relief. Officials want Treasury to write off an additional R2 billion, which would cut the municipality’s total Eskom arrears to about R3 billion from the current R5 billion.
Municipality says it meets Treasury’s criteria
MMC Finance According to Hassan Mako, who told reporters that the municipality has already begun discussions with the appropriate Pretoria authorities, Emfuleni has complied with the conditions of the debt relief framework that was put in place last year.
Since we think we meet all the requirements, Mako added, “We are also going through a process right now to see if we can get the second write-off.” “If we receive another write-off, we will have R3 billion left out of the remaining R5 billion.”
Emfuleni’s initiative highlights the increasing strain on local governments, which are caught in a vicious cycle of low revenue collection, soaring operating expenses, and growing utility arrears.
Additionally, the municipality has encountered difficulties with Rand Water, to which it owes hundreds of millions of rand. It came under increased scrutiny earlier this year for not fulfilling its end of a separate repayment agreement.
Treasury has previously issued a warning that municipalities will only be eligible for debt write-offs if they exhibit structural reforms and increased financial management discipline. Critics contend that repeated bailouts run the risk of fostering a cycle of dependency without addressing the underlying causes of poor management, despite Emfuleni’s insistence that it has taken the necessary steps to qualify.
Growing municipal arrears continue to be a significant obstacle to Eskom’s turnaround efforts, as the company struggles with tight cash flows. With more than R70 billion owed by local governments across the country, the power utility has continuously identified municipal non-payment as one of the largest threats to its viability.
