Eskom tightens grip on Joburg after R5.2bn debt default

Eskom will have to watch over the City of Johannesburg’s management of its revenue collection and billing systems in order to get paid some of the R5.2bn it is owed before July 1.

This action formed part of the agreed plan to ensure the city keeps up the payments towards its debt to Eskom for the next month to avoid the power utility plunging the metro into darkness.

Eskom, which will now be the city’s technical partner during this period, will have oversight into the city’s finance management, said electricity minister Kgosientsho Ramokgopa on Tuesday following recent meetings with Joburg mayor Dada Morero and Eskom CEO Dan Marokane.

Ramokgopa said the parties had agreed to stick to the existing 2025 debt repayment agreement rather than negotiating a new one.

This comes after Eskom issued a final warning to the city to settle an overdue bulk electricity debt of R5.2bn.

The utility has threatened to reduce or cut electricity to bulk supply points starting from July 8 if the arrears are not cleared.

Ramokgopa said the key difference now is Eskom’s direct involvement in supporting City Power and the municipality with technical and financial interventions aimed at improving collections and reducing losses.

“As opposed to engaging with Johannesburg at arm’s length…we have accepted that we need to provide some degree of technical support to City Power,” he said. “And by that we are not suggesting that there’s no capacity in City Power; what we are saying is that perhaps that capacity is not sufficient to meet the demands of the complexity of the system.”

Ramokgopa said the intervention would focus on three immediate areas: improving revenue collection, ensuring accurate billing, and addressing technical losses in the electricity network.

“We know, for example, that there are about 30% technical losses experienced in Johannesburg,” he said. “The average in the country is about 10%. In short, for every R100 of bulk purchases from Eskom, they already lose about R30 before they can even bill their customers, so it’s low-hanging fruit.

“We must address the entire value chain, technical losses, the issues of completeness of billing, accuracy of billing, and also making sure downstream that those that are entitled to free basic services get to have them, ensuring that the people are charged at the right tariff,” he said.

Ramokgopa said revenue generated from electricity sales would need to be ring-fenced to ensure Eskom is paid and that infrastructure investment is prioritised.

“So that there’s a line of sight on what is collected, to defray your bulk purchases, ensure that you invest in the refurbishment of your transmission and distribution asset base. So ring-fencing the revenues is a big part of that,” he said.

Morero acknowledged that the city’s collection failures contributed to the default and poor revenue collection in January.

“The failure on our side…was not indicating much earlier to Eskom that we were looking at our revenue line and could see that we may not be able to pay,” he said.

“Eskom has an obligation in terms of its own revenue management, and I suppose they should exercise their credit management and credit control measures. If a customer doesn’t pay us, we cut them off until they are able to pay us,” he said.

Ramokgopa said the technical teams from Eskom, City Power and the city would finalise the details of the intervention by next week.

Sowetan