Opinion
- Minister Kgosientsho Ramokgopa has once again stepped in to prevent potentially catastrophic power disruptions in Johannesburg as City Power’s debt to Eskom spirals beyond R5.26 billion.
- The crisis reflects a systemic governance failure in which municipalities routinely collect electricity revenue from consumers but fail to pay Eskom in full.
- Repeated debt agreements, bailouts, and political interventions continue to fail because the underlying causes are rooted in decades of institutional decay, political patronage, and weak accountability.
South Africa’s Minister of Electricity and Energy, Kgosientsho Ramokgopa, has once again been forced to intervene in an escalating financial and operational crisis between Eskom and Johannesburg’s City Power in an effort to prevent severe electricity supply restrictions to the country’s economic hub.
The latest intervention follows Eskom’s threat to disconnect or throttle bulk electricity supply points to Johannesburg over an outstanding debt of R5.26 billion. A further R1.58 billion payment is due on 5 June 2026, which would have pushed the total exposure beyond R6 billion.
Under the newly announced framework, Eskom engineers will be embedded directly into City Power to assist with technical capacity, skills transfer, operational inefficiencies, and the reduction of technical losses and electricity theft. The agreement also prioritises improved billing accuracy, the ring fencing of electricity revenue, and the strict protection of Johannesburg’s current monthly account obligations while historical debt disputes are addressed.
On the surface, the intervention appears constructive and pragmatic. In reality, however, it represents yet another emergency response to a governance crisis that has become deeply entrenched across South Africa’s municipal landscape.
This is not the first time Ramokgopa has announced a breakthrough agreement with Johannesburg amid optimistic political rhetoric.
In June 2025, the Minister unveiled what was presented as a landmark settlement between Eskom and City Power over more than R5 billion in debt. Under that agreement, City Power committed to paying R3.2 billion over four years while Eskom wrote off approximately R830 million in penalties, interest, and disputed charges related to load shedding estimations and notifiable maximum demand penalties.
At the time, Ramokgopa described the agreement as a potential template for resolving municipal debt crises nationally.
The agreement subsequently collapsed after City Power again failed to comply fully with payment obligations.
The pattern has since become painfully familiar. Political leaders announce payment arrangements, Eskom grants concessions, municipalities make partial payments, agreements are breached, and the crisis re-emerges months later in an even worse position.
The deeper problem is that South Africa’s municipal debt crisis is not fundamentally a billing dispute. It is the consequence of a long term collapse in governance capacity across municipalities and state owned entities.
For years, municipalities have collected electricity revenue from consumers while diverting substantial portions of those funds away from electricity related obligations. Eskom Group Executive for Distribution, Monde Bala, recently warned that metros have effectively joined smaller municipalities in a culture of chronic underpayment or non-payment despite continuing to collect money from end users.
Related news: Tax payers money is already nearing R495 billion in Eskom bailouts
Eskom chief executive officer Dan Marokane has openly acknowledged that municipal debt now poses a fundamental threat to Eskom’s financial sustainability.
The numbers are staggering.
Eskom’s municipal debt exposure has now reached R110 billion. At the same time, the utility itself remains heavily dependent on state support, with government bailout and debt relief commitments approaching R495 billion. Eskom continues to carry more than R360 billion in unsustainable debt.
In practical terms, South African taxpayers are increasingly financing a circular crisis in which failing municipalities do not pay Eskom, Eskom cannot sustain its finances, and national government repeatedly intervenes with further bailouts funded Byby the tax payer.
This cycle is neither accidental nor temporary.
The current situation reflects the long term consequences of ANC governance practices that prioritised political patronage over institutional competence within municipalities and state owned entities. Critical technical and financial positions were too often filled through political considerations rather than merit, while corruption, weak oversight, and procurement abuses steadily eroded operational capability.
The result is visible across much of the country. Municipal billing systems have collapsed. Electricity losses continue rising. Revenue collection is deteriorating. Infrastructure maintenance has been neglected for years. In many municipalities, administrative dysfunction has become normalised.
The developmental state model, as implemented over decades, increasingly weakened accountability and professional administration within local government structures. Dysfunctional municipalities were frequently tolerated with limited consequences, while political intervention often focused on crisis management rather than structural reform.
The repeated failure of municipal debt relief programmes further illustrates the depth of the problem.
The National Treasury’s R56.8 billion municipal debt relief initiative introduced in 2023 was intended to stabilise municipal finances through conditional debt write offs tied to strict revenue collection and payment discipline. Yet many municipalities failed to comply with even the basic conditions required to qualify for relief. Read more
Johannesburg is not an isolated case.
The City of Tshwane has similarly entered into a long term payment arrangement with Eskom over R6.7 billion in debt despite already carrying approximately R11 billion in broader liabilities. Serious doubts remain over whether the metro can realistically meet those obligations given its financial condition. Read more
What is increasingly evident is that cosmetic settlements and politically convenient announcements cannot solve a structural governance failure.
Ramokgopa is correct that Johannesburg’s crisis has national implications. A major electricity disconnection in the country’s economic centre would have devastating consequences for business confidence, industrial activity, investment, and national economic stability.
However, the repeated need for ministerial intervention also highlights the extent to which normal institutional governance mechanisms have broken down.
South Africa’s energy transition ambitions, infrastructure investment plans, and economic recovery objectives all depend on financially functional municipalities capable of maintaining electricity networks, collecting revenue efficiently, and supporting infrastructure development.
Without restoring technical competence, enforcing accountability, depoliticising municipal administration, and rebuilding institutional capacity, the cycle of debt, bailouts, and operational crises will continue.
Ultimately, the municipal debt crisis is not merely a financial issue. It is a governance crisis decades in the making.
South Africans will have an opportunity to express their judgment on that governance model in the upcoming municipal elections.
Author: Bryan Groenendaal
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