Eskom warns of power cuts to ‘defaulting’ City of Johannesburg

The City Johannesburg’s (CoJ’s) worsening financial position is further in the spotlight, with Eskom warning on Tuesday night that it may cut power to certain bulk supply points in the metro due to the city’s ballooning debt and defaults on payment agreements.

South Africa’s biggest city and financial hub owes Eskom more than R6.8 billion in debt and current account obligations, according to the state-owned power company.

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“As a result of CoJ/City Power’s continued failure to honour its electricity supply agreement with Eskom, including repeated defaults, Eskom has been forced to issue a notice of its intention to reduce, interrupt and/or terminate the supply of electricity to certain bulk supply points against CoJ,” it said in a strongly worded statement on Tuesday night.

Eskom noted that the CoJ and/or City Power currently owes an arrear debt of over R5.25 billion, excluding the current account of a further R1.58 billion due on 5 June 2026.

Payment obligations 

“Eskom has been working with CoJ and/or City Power for over two years to support the metro in meeting its payment obligations,” it said.

“Eskom maintains it simply cannot be acceptable to the city’s residents and all South Africans that CoJ/City Power is collecting electricity revenue but failing to pay over Eskom’s share,” it added.

CoJ and Mayor Dada Morero are yet to comment on Eskom’s threat to cut or reduce power supply to the metro. However, Morero ironically cited lights still being on in the city in defending the metro’s financial position recently.

Eskom’s statement comes as Finance Minister Enoch Godongwana demanded that the metro withdraw its pay increase agreement with municipal unions, warning that the city could not afford the hike.

It also follows recent news that French development financiers denied CoJ further loans and credit rating agency Moody’s has put the city on review for downgrades.

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Eskom warned on Tuesday that while it “continues to focus on being cost-efficient” – escalating municipal and metro arrear debt is undermining its efforts.

“Eskom’s financial sustainability and ability to supply electricity at affordable prices is dependent upon its ability to improve its balance sheet by increasing revenue and reducing expenses. Revenue can only be increased by collecting electricity debts and/or increasing electricity tariffs,” it said.

“Across the country, many municipalities and metros are working with Eskom to develop sustainable debt solutions and Eskom is continuing to accelerate its support for this approach,” it added.

On 5 May, Eskom announced that nine municipalities have received council resolutions to sign distribution agency agreements (DAAs) following consultation processes.

“Eskom provides a solution to support municipalities and metros to sustainably deliver electricity. Eskom has developed the DAAs, which is a long-term, non-permanent, contract between a municipality or metro and Eskom, as part of the Active Partnering initiative,” it said.

Eskom stressed that the DAAs “offer a suite of services and solutions aimed at restoring the sustainability of electricity provision in a municipality or metro, by enhancing its technical and financial sustainability”.

“The services include skill development and training, replacement or installation of smart meters, as well as Eskom collecting revenue on behalf of the municipality. Eskom is working nationwide to assist in the rollout of this initiative.”

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